EMPLOYER INFORMATION & RESOURCES
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BENEFITS OF OFFERING A SECTION 125 PLAN WITH PRECISION ADMINISTRATORS
Precision Administrators, Inc. (PAI) has been administering Section 125 Plans for companies of all shapes and sizes for over 30 years. A Section 125 Plan allows for companies of any size to offer the option to withold fringe benefits such as Employer Sponsored Group Health, Group Dental, Group Vision, and other eligible Insurance premiums, as well as Health Care Reimbursement Accounts and Dependent Care Reimbursement Accounts from their payroll on a pre-tax basis.
By doing so, the elections reduce the employees’ gross income for purposes of income tax AND the employer enjoys a substantial savings in their payroll tax liabilities. The Section 125 Plan is exempt from all federal and state income tax along with FICA tax, which reduces the Employer’s matching Social Security and Medicare matching tax contributions. Unemployment taxes on the state and federal level are also reduced as they are based on the lower gross taxable income. The average savings for participating employees range between 25-30%.
HEALTH CARE REIMBURSEMENT ACCOUNTS
A Health FSA or an HCR Account is an Employer sponsored benefit defined under Section 213 of the Internal Revenue Code and allows for employees to pay for eligible medical, dental, or vision expenses on a pre-tax basis through salary reduction. For a more comprehensive listing of eligible expenses, please go to our FAQ page.
Employees can utilize the full annual projected amount to pay for out-of-pocket eligible medical, dental, or vision expenses that are not covered by insurance (i.e. annual deductibles, office co-payments including dental and vision, prescriptions, some over-the-counter items, and orthodontia) with tax-free funds.
The employee has the option to contribute to the plan up to the Federal Limit of $2,750 for 2020 (for 2019 the amount was $2,700). As the Employer you also have the option to set a lower maximum contribution, referred to as a "Med-Cap".
In conjunction with an HCR Account, PAI offers the benefit of a Prepaid Benefit Visa® Card to each participant. The Prepaid Benefit Visa® Card allows your participating employees the ability to have immediate access to their beneftis 24/7 - 365.
DEPENDENT CARE ACCOUNTS
Dependent Care or Day Care Expenses are one of the largest out-of-pocket expenses for families today. By offering your employees a Dependent Care Flexible Spending Account, you give your employees the opportunity to withhold this expense on a pre-tax basis up to the Federal Limit of $5,000.00 annual maximum. Eligible expenses include, but are not limited to: before and after school care, summer day camp, nursery school and/or Pre-Kindergarten, and child or elderly day care.
Dependent Care Accounts work by having money set aside from employee's paychecks prior to taxes being taken out. Once a member files a claim, they are reimbursed their per-payroll election amount by Precision Administrators, Inc.
Dependent Care Accounts, along with Health Care Reimbursement Accounts are a win-win for both employees and employers alike!
HEALTH REIMBURSEMENT ARRANGEMENT'S (HRA'S)
An HRA Account is established by the Employer in order to offset the cost of a High Deductible Health Care Plan (HDHP) for their employees. These accounts are funded solely by tax-deductible Employer Contributions and the contributions required are funded on a post-claim basis. Through careful consideration of the current Health Insurance Plan, PAI can help you determine if this would be a cost-effective benefit to offer your employees.
Under an HRA Plan, the Employer determines what items are eligible for reimbursement and at what rate (100% or a given percentage determined by the employer). Many employers require that the employee be responsible for some portion of the deductible before access to the HRA Benefit is allowed.
Covered employees must present eligible documentation (such as an EOB or Explanation of Benefits) that falls within the parameters of the Plan-Year prior to the Employer funding the claim before they can be reimbursed.
Precision Administrators, Inc. offers full COBRA Administration. COBRA is a federal law that directs the continuation of certain employee benefit plans when employee coverage ends. Employers must comply with the COBRA laws if they maintain a group Health Insurance Plan and have 20 or more full-time and/or part-time employees.
PAI can work closely with your HR department to handle your COBRA needs and protect your company. We keep up-to-date with the law, so you don't have to. PAI has the tools, experience, and knowledge to make COBRA compliance easy AND cost-effective.