(PRWEB) August 31, 2012
Zane Benefits, the leader in defined contribution health benefits, provides comprehensive and flexible alternatives to traditional employer-sponsored health insurance. Today, Zane Benefits published information about pre-tax medical accounts and how they can benefit businesses.
Due to rising health insurance costs, the majority of U.S. businesses are increasing the employees' share of health care.
Many businesses are looking for ways to lower the expense of medical benefits without reducing coverage for employees. Pre-tax health care accounts can help businesses and employees save money by paying for health care expenses with pre-tax dollars.
The most common forms of Pre-tax Medical Accounts include:
HRA - A Health Reimbursement Arrangement, or HRA, is an IRS approved, employer-funded, tax advantaged employer health benefit plan that reimburses employees for out of pocket medical expenses and individual health insurance premiums. A health reimbursement arrangement is not health insurance. A health reimbursement arrangement allows the employer to make contributions to an employee's account and provide reimbursement for eligible expenses. A health reimbursement arrangement is an excellent way to supplement health insurance benefits and allow employees to pay for a wide range of medical expenses not covered by insurance. It is often referred to (incorrectly) as a health reimbursement account.
PRP - A Section 125 Premium-Only-Plan, or Premium Reimbursement Plan, is a cafeteria plan which allows employees to pay their health insurance premiums with tax-free dollars. Traditionally, these POP plans have been used in combination with employer-sponsored group health insurance plans. However, beginning January 1st, 2009, employees can now use POP plans to pay individual health insurance premiums with tax-free dollars.
Health Flexible Spending Accounts (FSA) - With a Health Flexible Spending Account, or FSA, employees direct their employer to lower their pre-tax wages next year by $200/month, and the employee, on the first day of the next plan year, receives a $2,400 FSA allowance for medical expenses. The employee must be given access to the full $2,400 on the first day of the plan year. If an employee spends the full $2,400 in the first month and quits, the employer is not allowed to recover the unpaid balance.
HSA - Health Savings Accounts, or HSAs, are individual bank accounts owned by employees that allow tax-free medical expense reimbursement. While HSAs are often packages as "employer benefits", HSA rules allow individuals to set them up and contribute to them on their own, making them more like IRAs.