Fringe Benefit Plans

With the ever‐rising cost of providing medical coverage for employees, companies find it necessary to defer more of the financial burden to their employees. A majority of employers have transferred a portion or all the cost of health insurance premiums to their employees but are seeking a way to minimize the burden to the employees.

A fringe benefit plan will allow the employer to establish a mechanism to provide the employees tax savings on the employees’ health insurance premiums, out of pocket medical expenses and dependent daycare expenses.

Properly designed fringe benefit plans give the employer and employee an opportunity to choose an individualized benefit package. A fringe benefit plan may be set up to provide any combination of the following programs:

  • Section 125 (Cafeteria) Plans
    • Premium Conversion (POP) Plans – Employees have the option to pay premiums in the employer‐provided health plans on a pre‐tax basis.
    • Medical Flexible Spending (MFSA) Accounts – Employees have the option to set aside funds on a pre‐tax basis to pay health care expenses. Expenses can either be reimbursed by the employee’s account or the employee can pay via his/her benefit debit card.
    • Dependent Daycare Flexible Spending (DFSA) Accounts – Employees have the option to set aside funds on a pre‐tax basis to pay dependent daycare expenses. Expenses can either be reimbursed by the employee’s account or the employee can pay via his/her debit benefit card.
  • Health Reimbursement Accounts (HRA) – These plans allow the employer to fund individual reimbursement accounts for their employees and define the medical expenses in which the funds can be used to reimburse. The plan document will define the reimbursable expenses and can be designed to fit the needs of the employer and the employee.
  • Health Savings Account (HSA) – The accounts can be established by any taxpayer who currently has a high deductible health plan. These accounts are similar to the Medical Flexible Spending Accounts but have additional flexibility.

Integral to the success of a fringe benefit plan is an understanding by the employees of the tax benefits of the different programs. Our experience in conducting or facilitating employee meetings works to promote confidence and participation in the plan.

Find a Fringe Benefit Plan:

Cafeteria Plans

Health Reimbursement Accounts (HRA)

Health Savings Accounts (HSA)

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