Care125 Benefits Plans

Employee benefits remain a very important compensation feature for employers and a major factor in employee retention. In today's tough economic environment with ever-rising group health care premiums, benefits managers are pressed into making hard choices. Care125 has proven benefits options that actually help a company save money.

Care125 offers businesses a variety of consumer-driven programs designed to benefit both the employer and the employees. These programs leverage pre-tax earnings to pay for predictable expenses, such as health care, day care for dependents, and transportation & parking expenses. Employees save income taxes on each dollar used to pay for these programs. Employers will see a reduction in FICA and FUTA payments as their work force reduces their taxable earnings. Below is a brief description of each plan.

MedFSA - Medical Flexible Spending Account

MedFSAs are an IRC Section 125 qualified "cafeteria" plan that allows medical expenses for employees and their dependents to be paid with pre-tax dollars. The employee uses the plan to pay for expenses that fall in the "gap" in his or her group health coverage, including deductibles, copays, and even many over-the-counter medications.

A pre-determined amount is regularly deducted from an employee's paycheck on a pre-tax basis to fund the account. Employees save on state and federal income taxes, as well as Social Security (FICA). The higher the employee's tax bracket, the greater the savings.

Employers save on every dollar put into the program by a reduction in the company's overall FICA contribution. MedFSAs are a win for both employees and employers.

Dependent Care

An IRC Section 125 Flexible Spending Account (FSA) offers a incredible opportunity for employees to reduce taxes by paying up to $5,000 per year for qualified dependent care expenses using pre-tax dollars. An employee's taxable income is reduced and their spendable income is increased each payday.

Employers benefit by offering a much needed and desirable benefit to the parents of their work force without incurring additional administrative burdens. Plus, the payroll tax savings more than covers the program fees. On average, two percent (2%) of all redirected dollars go directly to the company's bottom line.

Care125 uses a unique system that pays day care providers directly the same week that money is deducted from the employee's paycheck. There is no need for the employee to "pay twice" for day care expenses and wait to get reimbursed.

HRA - Health Reimbursement Arrangement

HRAs are the newest way for employers to give their employees freedom of choice in health care planning while maintaining effective cost controls. The employer agrees to reimburse an employee for a predetermined portion of their medical expenses, for instance, part or all of their group insurance deductible. There is no "use it or lose it" rule. Employers typically fund these reimbursements with savings realized bu switching from their expensive, low deductible group health plan to a more economical high deductible plan.

Unlike a MedFSA, where the IRS requires the annual election to be available on the first day of the plan year, the employer has the choice of funding an HRA either monthly, quarterly, semiannually, or annually. The HRA must be funded with 100% employer dollars. HRAs cannot be paid for, directly or indirectly, through employee salary reductions, or provided through the company's cafeteria plan. The actual amount of the employer's contribution is tax deductible. If an employee should leave, or be terminated, the balance of their fund stays with the employer.  

TMA- Transportation Management Account

TMAs are a non-Section 125 means to offer pre-tax savings on recurring employee transportation expenses. Because they do not fall under Section 125 rules, there is no plan document and the enrollment process is simplified. Employees can pay up to $100 for mass transit expenses per month and up to $190 parking expenses per month with pre-tax dollars.

Covered parking expenses include parking at a facility near place of work as well as parking near mass transit. Covered mass transit expenses include costs of passes, tokens, fare cards, vouchers, or any item that entitles the employee to use mass transit to or from their place of work.