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Health Savings Accounts and a Cafeteria Plan– Getting Your Employer on Board

May 10th, 2011 • 0 Comments • Posted by admin

Sure, you know the benefits of a Health Savings Account, or HSA, but your employer still isn’t offering it.  Here are a few things you can say to convince him.

“Your Employees Will Appreciate It.” Everybody’s trying to do all they can to save money.  An HSA is a great benefit because it lets you put aside money to pay for health care expenses.  You can earn interest on the contributions tax-free, can spend the money when you need to without a “use it or lose it” deadline, and can use the money on yourself, your spouse, or your kids.  Tell your employer how great this would be for you, and how offering a HSA makes him look like a hero.  It’s an attractive benefit, not only to the current employees, but any future talent he might want to attract.

“Run it Through Our Cafeteria Plan, and You’ll See Big Tax Savings.” The biggest advantage of the Section 125 Premium Only Plan – even without a HSA – is its tax-advantaged status.  When you pay for insurance through a

Section 125 POP plan, the premiums are deducted from your paycheck on a pre-tax basis – that means they come out of your taxable income, reducing both your income tax and FICA taxes.  It’s like getting an instant pay raise!

Remind your employer that he gets this benefit too – his matching share of FICA and Medicare are reduced, as are FUTA and possibly state unemployment taxes.  It’ll be the easiest expenses he’s ever cut.

Including HSAs in the Section 125 plan has the same effect as any other benefit added to the plan – employees contribute, taxable income is lowered, and there are tax savings all the way around.  If your employer adds the HSA component and everyone contributes, the tax savings could be huge.

“It’s Easy.” The administrative requirements of a Section 125 plan may seem daunting, but there’s no need to be scared off.  Plan administration can be painless if you get the right type of help – like hiring the professional at TaxFreePremiums.

Your plan document needs to include the HSA, and TaxFreePremiums can help you with all the changes.  Other Section 125 administrators charge more for this service, but we include this provision in the low annual membership of $99.  We’ll also provide you with up-to-the-minute compliance updates to help you keep on top of everything, and nondiscrimination testing software to make sure you never run afoul of the IRS – a fantastic value.  For one low price the housekeeping headache goes away, your employees are happy, and you start saving money.  It’s a win-win.


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