FSA Administration Services
EmCentrix offers FSA administration services that integrate with our HRIMS, providing complete connection of your information. The benefit of EmCentrix’s FSA administration is not limited to the tax savings your company will enjoy.
With our services, you’ll save time as well. The days of entering data into
multiple systems are over.
EmCentrix’s online Flex Plan modules provide integrated online delivery, enrollment, and administration for these popular employee benefit plans. The module connects to Medi Bank and the Debit Master Card for real time claims payment, reporting of account usage, and account balances.
Our standard Cafeteria Plan administration services include:
- An internet‐based platform to administer Flexible Spending Accounts.
- Online enrollment forms, claim forms, change in status forms, related IRS publications, and master copies of the plan documents.
- The ability to process completed enrollment forms by setting up employee accounts in the Cafeteria Plan claims processing system.
- Cafeteria Plan, Health Saving Account, and Dependent Care Assistance plan documents ready for review and execution.
- Claims processing services for the Flexible Spending Accounts established under the Cafeteria Plan, including direct deposit service for claims.
- MasterCard Debit Card for claims, issued to each participant.
- Employee confirmation statements provided after online enrollment.
- Online claims payment, usage history, and account balance information.
- A monthly account activity report, year‐to‐date reports, and an annual forfeitures report for employers.
- A annual signature‐ready IRS Form 5500 for the Cafeteria Plan.
- Nondiscrimination testing annually, after receipt of completed enrollment forms upon the close of open enrollment.
What is a Flexible Spending Account?
A Flexible Spending Account (FSA) allows employees to set aside pretax dollars to pay for qualified expenses such as health care, dependent care, and transportation expenses. In addition to providing flexibility in meeting unexpected costs, an FSA also saves individuals money by reducing their taxable income. But Flexible Spending Accounts are not just beneficial for employees. Employers can also benefit greatly from the savings they gain.
Money deducted from an employee's pay into an FSA is not subject to payroll taxes or Workers’ Compensation calculations, resulting in a substantial savings.
What is a Health Reimbursement Arrangement?
An HRA is an employer-funded account to repay the unreimbursed medical expenses
of employees, along with an option to carry unused funds forward. Only owners of Corporations may participate in the plan. Other entities may sponsor an HRA, but
the owners will not be able to receive reimbursements through the plan.
An HRA account may reimburse any or all of the same expenses as a Section 125 Health Flexible Spending Account (FSA) and reimbursements of qualified medical expenses are tax-free. Unlike a Health FSA, where the IRS requires the annual election to be available on the first day of the plan year, at the employers option only a portion of the HRA limit is added to each account once per month or pay period. This means no surprises and no big hits to the employer's checkbook. The employer will only be liable for a portion of each employee's HRA annual limit. Alternatively, the employer may fund the entire annual HRA on day one of the plan.
- What benefits can an employer include in an HRA Plan? Medical expenses not covered by insurance.
- What happens to the money that an employer puts into an HRA?
At the employer's option, the plan can be designed such that dollars not spent by employees can be rolled over to fund the employee's expense in future years.
|Employer Benefits||Employee Benefits|
|Reimbursements of qualified claims are tax-deductible for the employer.||Supplements employees' insurance at no cost to them.|
|Combining a higher deductible insurance plan with an HRA can lower your company's health insurance cost.||Benefit is not taxed.|
|Administrative costs are tax deductible and can be paid by your dollars, your employees' dollars, or a combination of both.||Employees do not have to be covered under any other health care plan to participate.|
|Unused employee account balances can be rolled forward each year or forfeited by employees, depending on your benefits strategy.||Employees can be reimbursed for a health care plan that meets their or their families' specific needs, as opposed to a standard company plan.|
|HRAs compliment FSA plans and can enhance FSA plan participation levels.||Contributions that employers make can be excluded from employees' gross income.|
|Employers know their maximum expense related to their health care benefit.|
- The plan must be in writing and a Summary Plan Description must be distributed to each plan participant.
- The plan may not discriminate in favor of highly compensated employees
- Employers are required to pay eligible medical expenses only to the extent of a participant's account balance.
- Employers maintaining HRA plans that cover more than 100 participants generally must file an IRS Form 5500 each year.
- HRAs can be restricted to cover only certain benefits, like prescriptions, or co-pays and deductibles.
- Eligible expenses must be incurred during the participant's period of coverage but may be reimbursed at a future date. This is a plan design feature.
- HRA funds cannot be withdrawn or "cashed out" upon an employee's termination or retirement. Funds must always be used for qualified medical expenses.
- Plan design options are flexible. HRAs may be designed to roll unused balances forward from one year to the next or forfeit to the employer at the end of the coverage period. The plan may, but is not required to, cover terminated or retired employees.
- Owners are not eligible to participate in these plans unless they are the owners of a C Corporation.
HRA Plan Design Options
The Comprehensive Plan pays all medical expenses not covered by insurance. These expenses include, but are not limited to, dental and vision fees, chiropractic services, co-pays, deductibles, and insurance premiums. This plan could be coupled with a higher deductible or limited coverage insurance arrangement or as an additional employee benefit.
A Limited Plan covers only a group of expenses such as dental or vision. It can also be restricted to a single medical expense such as prescriptions.
The Insurance Only Plan allows employees to pay for employer-provided insurance coverage or individually owned policies for health, disability, or long-term care insurance.
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