HSA, FSA, and HRA: Pre-Tax Benefits That Save Employers and Employees Money
Pre-tax benefit accounts reduce taxable payroll for employers and increase take-home pay for employees. Saint Moore Insurance helps businesses set up Health Savings Accounts, Flexible Spending Accounts, and Health Reimbursement Arrangements as part of a complete benefits strategy.
What Are Pre-Tax Benefits?
Pre-tax benefits are employer-sponsored accounts that allow employees to set aside money before taxes to cover qualifying medical, dental, vision, and dependent care expenses. The three most common structures are:
- Health Savings Account (HSA): Paired with a high-deductible health plan. Contributions are employee-owned, roll over year to year, and may be invested. Available when the group medical plan qualifies.
- Flexible Spending Account (FSA): Employer-sponsored accounts funded by employee payroll deductions. Funds are generally use-it-or-lose-it within the plan year, subject to IRS rules. Dependent care FSAs are also available.
- Health Reimbursement Arrangement (HRA): Employer-funded accounts used to reimburse employees for qualifying health expenses. ICHRA arrangements allow employers to reimburse individual health insurance premiums tax-free.
Tax advantages, eligible expenses, and account rules vary by account type and IRS guidelines. Contact the Saint Moore Insurance Employee Benefits department for guidance on which structure may be right for your business.
Who Needs Pre-Tax Benefits?
Pre-tax accounts are increasingly popular with employers of all sizes because of the tax savings they generate on both sides of the payroll. Saint Moore Insurance works with employers who want to:
- Reduce FICA payroll taxes through Section 125 cafeteria plan structures
- Add an FSA or HRA to complement an existing medical plan
- Implement an ICHRA to reimburse employees for individual health coverage
- Give employees a way to reduce out-of-pocket costs through an HSA or dependent care FSA
For specifics on which account type may be appropriate for your group, contact the Saint Moore Insurance Employee Benefits department.
When employees contribute to an FSA or HSA through payroll, employers may save on FICA taxes on those contributions. A Section 125 cafeteria plan structure formalizes these savings. Saint Moore Insurance helps employers understand the potential tax impact and set the accounts up correctly from the start.
Employees who use pre-tax accounts pay for qualifying health and dependent care expenses with pre-tax dollars, which lowers their taxable income. This benefit is often underused because employees do not see it until it is explained clearly. Saint Moore Insurance helps communicate the value to your team at enrollment.
An Individual Coverage HRA allows employers to reimburse employees for individual health insurance premiums tax-free, instead of sponsoring a group plan. This structure gives employees more choice and employers more cost flexibility. Saint Moore Insurance can evaluate whether an ICHRA arrangement may make sense alongside or in place of your current group medical coverage.
How to Set Up Pre-Tax Benefits with Saint Moore Insurance
Getting covered is simple. Here’s how to get your policy started with Saint Moore in four easy steps.
Setting up pre-tax accounts is straightforward when you have the right guidance. Saint Moore Insurance walks you through each step.
Step 1: Identify the Right Account Type
Tell us about your current medical plan and workforce. Saint Moore Insurance reviews your situation and identifies whether an HSA, FSA, HRA, or ICHRA arrangement is the right fit.
Step 2: Set Up the Plan Structure
We assist with the Section 125 plan document and connect you with the right administrator. Every detail is handled so the accounts are compliant from day one.
Step 3: Communicate the Benefit to Employees
Employee adoption increases when the benefit is explained clearly. Saint Moore Insurance supports your team communication so employees understand what they have and how to use it.
Local roots. Nationwide reach.
St. Moore is headquartered in Redlands, CA, and deeply rooted in the Inland Empire but our carrier network covers all 50 states. Whether you're a local homeowner, a regional business, or have assets across multiple states, we have the market access to protect them.
Ready to Reduce Your Payroll Tax Burden?
Contact the Saint Moore Insurance Employee Benefits department to learn how pre-tax benefit accounts may work for your business. We will review your current setup, identify the right structure, and help you and your employees get more from your benefits budget.
