Health Insurance Tampa: What are pre-tax benefit accounts?

Scott Holcomb
Apr 8, 2015
3 min read

As health insurance brokers and consultants in Tampa our main job is to educate our clients so they can make the best decisions when it comes to their group health insurance.

At Accurate Insurance Solutions we provide our clients with a communication program that gives up to the minute information regarding current events affecting your HR and employee benefits decisions.

But a lot of times it comes down to being able to save money. Where and how can we as a group find ways to save money on our health insurance plans?

Let's take a look at pre tax benefit accounts. What are pre tax benefit accounts?

A pre-tax benefit account allows you to pay for certain expenses through deductions taken from your pay before taxes are taken out. By discounting the amount of taxable wages you owe taxes on your take home pay ends up being more than if you where to pay for the benefits after the taxes were taken out.

What are the different types of pre tax benefits?

Flexible Spending Accounts

Flexible Spending Accounts (FSA) allow your employees to put a portion of each pay check into a separate account, and use those funds to pay for qualified out of pocket expenses. Contributions are deducted prior to taxes, making them exempt from federal income tax, Social Security taxes, and in most cases, state and local income taxes. There is no increase in employer contributions for employee benefits.

Premium Only Plan (POP)

A section 125 premium only plan (POP) reduces payroll and the associated FICA and FUTA taxes by allowing employees to pay their portion of health, dental, disability and group term life insurance premiums on a pre tax basis.

Health Reimbursement Account (HRA)

A Health Reimbursement Account is an employer funded account that repays employees’ out of pocket medical expenses. Because employers reimburse employees as claims are submitted and control which expenses qualify, they typically spend less than they would with a traditionally insured group medical plan.

Employers can also determine which party pays first, set annual maximums and accrual limits, regulate roll-over funds, and provide an optional debit card for employee use.

Health Savings Account (HSA)

A Health Savings Accoun (HSA) is the best of a Flexible Spending Account and Health Reimbursement Account combined. To be eligible, employees must be participating in statutorily defined high deductible health plan (HDHP) and not covered under any other health plan. Unused contributions rollover from year to year and are not lost if the employee moves from one employer to another.

Common FAQ’s of Pre-Tax Benefits Accounts (Chart provided by Zywave)

What are some examples of a qualified medical expense?

Medical/health care expenses for employees and their families
Insurance deductibles
Single expenses for dental and/or vision plans

Did you know?

Pre-tax benefits accounts can save your employees an average of 30% in federal, state, and local taxes on the costs of qualified medical expenses, and increase their overall take home pay.

Lowering employee’s taxable income also reduces the employers payroll expense!!!

Diving into the world of pre-tax benefits can be a bit overwhelming; luckily Accurate Insurance Solutions can help.

Our online client support delivers transparency regarding claims turnaround time, phone metrics and more. At the same time, we focus on efficient, supportive service to ensure you’re getting the most value from your employee health care expenses.

Accurate Insurance Solutions Tampa’s employee benefit/HR consulting firm’s suite of employee benefit administration services allows you and your employees to save money by paying for health care expenses with pre-tax dollars.

With online account information, resources and forms, management is easy for employers and employees alike

Let us help and support you to find the right benefits plan for your business... set up a quick consultation today.