Health Savings Accounts (HSA), Health Flexible Spending Accounts (FSA), and Traditional Health Reimbursement Arrangements (HRA) are tax-advantaged plans designed to help employees pay for medical expenses, with key differences in how they are structured and managed.
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To supplement existing insurance coverage, WisMed Assure offers a variety of high-quality Health Savings Account (HSA) options. HSAs are portable, employee-owned accounts designed to cover a wide range of expenses, with contributions made by employees and employers. Participation requires enrollment in a high-deductible health plan (HDHP), and funds in the account carry over from year to year, ensuring long-term flexibility.
HSAs provide significant tax advantages, allowing employees and employers to pay for out-of-pocket medical costs and other qualified expenses tax-free. Some HSAs provide options to earn interest on unused funds or invest in mutual funds and other financial accounts to enhance growth over time.
Flexible Spending Accounts (FSA) are employer-sponsored plans that reimburse employees for qualified expenses but are not portable and typically do not allow funds to carry over unless the employer allows a carryover or grace period.
Employers can contribute to their HSA and FSA.
While HSA has contribution limits set by the IRS, FSA and HRA may have more flexibility, particularly in terms of employer contributions. HRA and FSA are subject to COBRA continuation rules, whereas HSA are not.
Each plan type also has specific employer requirements, including the need for plan documents, nondiscrimination rules compliance, and reimbursement substantiation.
Health Reimbursement Arrangements (HRA) are employer-sponsored plans that reimburse employees for qualified expenses but are not portable and typically do not allow funds to carry over unless the employer is using an HRA funding vs a claims payment.
While employers can contribute to their HSA and FSA, HRA are generally funded solely by employers.
HSA has contribution limits set by the IRS, while FSA and HRA may have more flexibility, particularly in terms of employer contributions. HRA and FSA are subject to COBRA continuation rules, whereas HSA are not.
Each plan type also has specific employer requirements, including the need for plan documents, nondiscrimination rules compliance, and reimbursement substantiation.
Section 125
A Section 125 plan, or cafeteria plan, is an employer pre-taxed program that allows employees who select health flexible saving account and more to have the ability to allow their premiums deducted on a pre-taxed basis. This helps employees lower their taxable income, and reduce Federal income tax, social security and medical taxes.
SPD Wrap
The Summary Plan Description (SPD) or wrap document is a document that provides plan participants with essential information about their retirement or health benefit plans. It outlines the plan’s rules, benefits, eligibility, and how the plan operates in accordance with ERISA law requirements. Plan administrators are required to provide the SPD or wrap document to participants free of charge. If there are any changes to the plan, participants must be notified through a revised SPD or a separate document called the Summary of Material Modifications (SMM).
A wrap document is used to combine and supplement multiple benefit plans into one comprehensive document. It often includes required legal language or additional disclosures and “wraps around” the employer-sponsored benefits to ensure that all necessary information is provided to participants. This helps ensure compliance with ERISA requirements, offering clarity and confirming that the plans meet federal regulations.
Chris Noffke, CSFS, GBDS
Vice President, Employee Benefits
Reach out to me to learn more. You can contact me at chris.noffke@wismedassure.org or 608.442.3734.
Chris Noffke, CSFS, GBDS
Vice President, Employee Benefits
Reach out to me to learn more. You can contact me at chris.noffke@wismedassure.org or 608.442.3734.