by daziumdesign@gmail.com | Sep 13, 2021
Eligible Individuals:
- Be enrolled in a group health plan whose sponsoring employer has over 20 employees
- Experience a qualifying event
- Or must be a qualified beneficiary of the person experiencing the qualifying event
Qualified Beneficiary:
Anyone covered under a group health plan on the day before an event that causes loss of coverage including:
- Participating employees, including part-time employees
- Their spouses
- Their dependents
- Retirees (unless they are eligible for Medicare)
- Partners in a partnership
Non-Eligible Individuals:
- An employee who is not yet eligible for your group health plan
- An eligible employee who declined to participate in your group health plan
- An individual who is enrolled for benefits under Medicare
(Ref. United State Department of Labor)
by daziumdesign@gmail.com | Sep 13, 2021
Cost Savings
Setting aside pre-tax dollars helps cover commuting costs and increase your actual take home pay. The following example illustrates these savings.
|
Without Commuter Savings Account |
With Commuter Savings Account |
| Monthly Gross |
$3,750.00 |
$3,750.00 |
| Pre-tax Contribution for Parking |
– $0.00 |
$340.00 |
| Pre-tax Contribution for Transit |
– $0.00 |
$340.00 |
| Adjusted Gross |
$3,750.00 |
$3,070.00 |
| Taxes (28%) |
$1,050.00 |
$893.20 |
| Take Home Pay |
$2,700.00 |
$2,177.80 |
| Less Parking Costs |
$340.00 |
– $0.00 |
| Less Transit Costs |
$340.00 |
– $0.00 |
| Income After Commuting Costs |
$2,020.00 |
$2,177.80 |
|
|
|
Savings: $157.80 per month or $1,893.60 a year
Who Is Eligible
For employee eligibility: as with the Flexible Spending Accounts, eligibility in the Commuter Savings Accounts (CSA), only requires that you are an otherwise eligible employee of an employer that offers these accounts as part of their benefits program. A unique feature of the CSA is that there is not an “annual enrollment period” for the program. Eligible employees may enroll in or make changes to their contributions at any time throughout the year.
Contribution Limits
IRS MANDATED PRE-TAX CONTRIBUTION LIMITS
|
2026 |
| Transit Expenses |
$340 |
| Parking Expenses |
$340 |
by daziumdesign@gmail.com | Sep 13, 2021
Cost Savings
An individual earns $45,000 annually and elects to contribute $3,400 annually to a Healthcare FSA to cover out-of-pocket medical costs.
YOUR ESTIMATED FSA COST SAVINGS EXAMPLE
|
Without FSA |
With FSA |
| Gross Earnings |
$45,000 |
$45,000 |
| FSA Contributions |
-$0.00 |
$3,400 |
| Adjusted Gross Pay |
= $45,000 |
$41,600 |
| FICA, Fed/State Taxes |
-$6,750 |
$6,322.50 |
| Out-of-Pocket Medical Expenses |
-$3,400 |
$3,300 (covered by FSA) |
| Total Take Home |
$34,848 |
$35,267.50 |
TOTAL SAVINGS WITH THE FSA: $419.50
Who Is Eligible
Employee Eligibility
In general, an individual must simply be employed by an employer who offers one and be otherwise eligible for benefits. Note: Even if the eligible employee chooses not to enroll in their company’s health insurance (for example, if an employee chooses to be on their spouse’s insurance plan instead) they can still sign up for the FSA. Owners of the company can participate in the FSA solely on their tax filing status. Below is a summary of those rules.
- C-Corporation Owners – May participate in an FSA and receive reimbursements tax free. C-Corp owners may use their FSA to reimburse their medical expenses, as well as those of their spouse and dependent.
- Sole Proprietors – Cannot receive reimbursements tax-free. However, if the sole proprietor is married, and their spouse is a W-2 employee, then the spouse can receive the tax-free benefit. In this case, the FSA is set up in the spouse’s name and the sole-proprietor is listed as a dependent.
- Partners – Cannot receive reimbursements tax-free. However, if the partner is married, and their spouse is a W-2 employee (but not a partner), then the spouse can receive the benefit tax-free. In this case, the FSA is set up in the spouse’s name and the partner is listed as a dependent
- S-Corporation Owners – That own >2% of the company’s shares and their spouse, parents, children, and grandchildren, cannot receive reimbursements tax-free (reimbursements are subject to federal income tax withholding).
- LLC’s – Owner participation varies based on the way the LLC files taxes (as a Partnership, S-Corp, or C-Corp).
Contribution Limit
Annual Contribution Limits
| FSA Plan Type |
2026 |
| Health Care |
$3,400 |
| Limited Purpose |
$3,400 |
| Dependent Care |
$7,500
– If you are married, filing a joint return or you are head of a house
$3,750
– If you are single or married, but filing separate
|
| Adoption Assistance |
$17,670
– Phase-out income thresholds: Begin at $211,160 and end at $251,160
|
|
|
by daziumdesign@gmail.com | Sep 13, 2021
Who Is Eligible
General Eligibility – Typically all benefit eligible employees can participate in an HRA.
Plan Eligibility – Employers can also set additional eligibility rules for the HRA plan such as:
- Limiting eligibility to a particular health plan as long as they do not discriminate in favor of highly compensated employees.
- Cover only employees or cover employees and their dependents, as well as domestic partners as long as they meet the IRS Section 152 definitions.
- Provide coverage to retirees.
(Note: Partners in a business, members of LLCs, and shareholders who own 2% or more in S-corporations, however, are not eligible to participate in the HRA.)
Contribution Limits
Funding Limits – There is no limit on the amount of money your employer can contribute to the HRA. Each year your employer may set the HRA limits based on the overall strategy and goals of the group health plan. Additionally, based on plan design, the maximum reimbursement amount credited under the HRA each year could be increased or decreased by amounts not used during a previous plan year.
- HRAs are funded solely by the employer.
- Contributions are not included in the employee’s income.
- No federal income taxes or employment taxes on amounts your employer contributes to the HRA.
Plan Designs
The Health Reimbursement Arrangement provides employers with enormous flexibility when determining the plan design that best fits their needs and budget. Below are just a few examples of plans designs an employer could implement for their group.
| HRA Type |
HRA Description |
HRA Example |
| Employee Pay First |
The employee pays their employer-defined portion of the out-of-pocket expenses. Once met, the employer funded HRA is activated and used to pay the remaining portion of the health plan deductible. |
Employee: $400 | HRA: $800
|
| Employer Pay First |
The employer funded HRA is used to pay the first portion of the health plan deductible, then the employee pays the remaining balance of deductible expenses. |
HRA: $200 | Employee: $600 |
| Employer GAP HRA |
The HRA employer pays the first portion of deductible expenses up to a limit defined by the plan. Next, the employee pays the remaining portion of the deductible expenses. The HRA employer is reactivated to reimburse a defined amount of co-insurance expenses after which the employee is responsible for the remaining portion of their co-insurance up to the out-of-pocket maximum. |
Employee: $400 | HRA: $800 | Employee: $400 |
| Employee Gap HRA |
The employee pays the first portion of deductible expenses up to a limit defined by the plan. Next, the HRA employer pays the remaining portion of the deductible expenses. The employee is then responsible for a defined amount of their co-insurance expenses before the HRA is reactivated and can be used to reimburse the remaining portion of their co-insurance up to the out-of-pocket maximum. |
HRA: $400 | Employee: $800 | HRA: $400 |
| Percentage Based Reimbursement |
The employer HRA reimburses the employee a percentage of their out-of-pocket deductible costs up to the employer defined HRA maximum amount. |
Employee: $500 | HRA (75%) Employee (25%): $1,000 |
| Co-Pay Share |
The employer can set a specific dollar amount to reimburse for certain co-pays. |
Dr. Office: $25 | RX: $50 | ER Visit: $75 |
| Premium Reimbursement |
Employers with less than fifty (50) full time employees are able to provide reimbursement through the HRA up to $4,950 for individual plans and $10,000 for family plans per year to help their employees purchase individual health insurance plans that best fits their unique needs. |
HRA (Individual) $4,950 | Employee (Individual): $1,050
Total Premium: $6,000
HRA (Family): $10,000 | Employee (Family): $2,000
Total Premium: $12,000
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by daziumdesign@gmail.com | Sep 13, 2021
64Cost Savings
- To determine how much cost savings the HSA may provide you and/or your family, you will need to consider several items.
- Your Total Contributions (Remember: Contributions as well as accrued interest to the HSA are tax free.)
- Your Total Estimated Expenses (Remember: Distributions on qualified medical expenses from the HSA are tax free.)
- The Premium Difference Between Your HSA Plan and Other Plan Options (Remember: Monthly premiums for the HDHP insurance are typically lower than those of a Traditional PPO.)
Your Estimated HSA Cost Savings Example
|
Traditional PPO + FSA |
HDHP + HSA |
| Gross Annual Pay |
$60,000 |
$60,000 |
| Maximum Annual Health Care FSA Contribution |
$3,050 |
$7,750 |
| Estimated Annual Family Premium |
-$13,000 |
-$11,000 |
| Adjusted Gross Pay |
$43,950 |
$41,250 |
| Estimated Tax Rate (15%) |
$6,622.50 |
$6,255 |
| Estimated Annual Expenses |
$3,050 |
$3,050 |
| Remaining FSA vs. HSA Balance |
+ $0 |
$4,450 |
| Remaining Take Home Pay with FSA vs. HSA |
$34,677.50 |
$37,045 |
|
|
|
YOUR TAKE HOME PAY COULD BE $2,367.50 MORE WITH THE HSA
All figures in this table are estimates and based on an annual salary and maximum contribution limits to the benefit account. Your salary, tax rate, health care expenses, and tax savings may be different.
Who Is Eligible?
In order to be eligible to enroll and contribute to a Health Savings Account (HSA), you must first ensure you meet the necessary requirements. If your answers to the below questions match ours then you are likely eligible to open and contribute to an HSA.
| Question |
Answer |
| Are you currently enrolled or covered by a HSA-qualified high deductible health plan? |
YES |
| Is the annual deductible for your health insurance plan higher than $1,350 for individual coverage or higher than $2,700 for family coverage? |
YES |
| Is the annual maximum out-of-pocket for your health insurance plan less than $6,750 for individual coverage or less than $13,500 for family coverage? |
YES |
| Are you covered by any other health plan (such as a spouse or parent) that is not considered a HDHP? |
NO |
| Are you currently enrolled in Medicare (Part A or Part B) |
NO |
| Are you currently enrolled in either a Health Care Flexible Spending Account (FSA) or Health Reimbursement Arrangement (HRA) that reimburses you for medical expenses in addition to dental and vision expenses? |
NO |
|
|
Contribution Limits
| Self-Only Coverage |
2024 |
2025 |
2026 |
| Maximum Annual HSA Contribution |
$4,150 |
$4,300 |
$4,400 |
| HSA Catch-up Contribution (Age 55 or Over) |
$1,000 |
$1,000 |
$1,000 |
| Minimum Annual Deductible for HDHP |
$1,600 |
$1,650 |
$1,700 |
| Maximum Out-of-Pocket Limit for HDHP |
$8,050 |
$8,300 |
$8,500 |
| Family Coverage |
2024 |
2025 |
2026 |
| Maximum Annual HSA Contribution |
$8,300 |
$8,550 |
$8,750 |
| HSA Catch-up Contribution |
$1,000 |
$1,000 |
$1,000 |
| Minimum Annual Deductible for HDHP |
$3,200 |
$3,300 |
$3,400 |
| Maximum Annual Out-of-Pocket Limit for HDHP |
$16,100 |
$16,600 |
$17,000 |
|
|
|
|
