As you may know, a Flexible Spending Account, or FSA, is an account for you to set aside pre-tax dollars to pay for eligible medical, dental, and vision expenses. But did you know there are different types of FSA plans? The first is a Dependent Care FSA, which is ideal to ensure dependent care costs are taken care for either a child under the age of 13 or if a spouse/dependent is unable to care of themselves.
This plan works as long as both spouses or custodial parents are employed. From there, you can contribute up to $5,000 pre-tax dollars per calendar year to pay for expenses such as: day care (child & adult), summer day camp (nursery school & preschool) plus before and after school programs.
The second plan to note is a Healthcare FSA, which is more straightforward. This plan allows you to contribute up to $2,850 annually to pay for eligible medical, dental, prescription, and vision expenses not covered by insurance. With the Healthcare FSA, the entire contribution election is available from day one. All payroll contributions throughout the year will go towards covering that individual’s election.
To familiarize yourself with the different types of FSA plans, check here.
A Health Reimbursement Arrangement (HRA) is an account funded by your employer that helps pay for qualified medical expenses acquired throughout a plan year. Here’s how you can benefit by participating in one.
You can use HRA account fund dollars to pay for doctor visits, copay, prescription drugs, and hospital services.
The funds in your account could be available from day one. They could also only be available as the employer deposits them into the HRA or any combination thereof. This will differ from employer to employer, as there are many different plan design options in a group HRA setting.
Funds that remain in your HRA at the end of the plan year may be carried over to the next year.
You can add HRA funds to your NueSynergy debit card to pay your providers for necessary healthcare expenses depending on plan design. In other cases, you will be able to file a claim for reimbursement and receive a refund for the expense from the HRA and into your personal bank account.
To learn more about an HRA and all of its utilizations, check here.
This week, the IRS released 2023 cost-of-living adjusted limits for health savings accounts (HSAs), high-deductible health plans (HDHPs), and excepted benefit health reimbursement arrangements (EBHRAs). All of these limits have increased from 2022. Everything you need to know about each limit increase is stated in our press release, which is down below.
The IRS has released an information letter responding to an inquiry from a qualified transportation plan participant whose employer decided to let him work from home permanently due to the COVID-19 pandemic. To avoid losing compensation reduction amounts he had previously set aside for parking, the participant asked whether his unused compensation reductions could be transferred to a health FSA under a cafeteria plan.
The letter explains that unused compensation reduction amounts under an employer’s qualified transportation plan can be carried over to subsequent periods under the plan and used for future commuting expenses, so long as the employee does not receive benefits that exceed the maximum excludable amount in any month. But cash refunds are not permitted, even to employees whose compensation reduction amounts exceed their need for qualified transportation fringe benefits. Furthermore, the Code prohibits cafeteria plans from offering qualified transportation fringe benefits, and IRS rules do not permit unused compensation reduction amounts under a qualified transportation plan to be transferred to a health FSA under a cafeteria plan. The letter also notes that COVID-19-related relief for FSAs gives employers the discretion to amend their cafeteria plans to permit midyear health FSA election changes for plan years ending in 2021.
EBIA Comment: The qualified transportation rules have proven sufficiently flexible to handle most situations resulting from the COVID-19 emergency. Most employers permit benefit election changes at least monthly, and plans can allow current participants to carry over unused balances indefinitely. Compensation reductions set aside for one qualified transportation benefit (e.g., parking) can even be used for a different transportation benefit (e.g., transit) if the plan permits and the maximum monthly benefit is not exceeded. But—as this participant’s request to transfer parking compensation reductions to a health FSA suggests—those options are not always sufficient. Because some risk of loss due to changing circumstances is unavoidable, employers should clearly articulate that risk to employees before they make compensation reduction elections.
As you may know, anyone who has a flexible spending account (FSA), can use their contributions to cover doctor visits (preventative, primary care, and specialists) and prescriptions. However, what you might not know is that any saved FSA dollars can also cover these commonly used products and services.
Dental services: including orthodontics
Vision products and services: including corrective procedures such as LASIK
Therapeutic services: including physical therapy & chiropractic care
Diagnostic procedures: including labs, scans, imaging
Mental health services: including psychiatric care, therapy & counseling
Medical supplies: including bandages, crutches, wheelchairs
Over-the-Counter Medications: such as Tylenol, Advil, Zyrtec
Fertility treatments: such as IVF, or birth control products
The Kansas Targeted Employment Act is enacted to incentivize employers to employ people with developmental disabilities in Kansas. For tax years 2022 through 2027, there will be a credit allowed against income, privilege, or premium tax liabilities imposed upon a taxpayer that qualifies as a targeted employment business or taxpayer outsourcing work to a targeted employment business for every hour that an eligible individual is employed in a calendar year in a targeted employment business and receives earned income as compensation. The credit only applies to wages for hours worked and not for any compensation for paid leave and is equal to 50% of the wages paid to the eligible individual on an hourly basis, up to a maximum credit of $7.50 per hour.
The credit is non-refundable, cannot be carried forward, and can only be used once each taxable year against tax liability imposed by only one of the income, privilege, or premium taxes. The maximum of all credits allowed each year will be $5 million. “Earned income” means compensation paid to a Kansas employee for competitive integrated employment that is equal to or greater than the minimum wage and is performed in a competitive integrated setting. “Targeted employment business” means those employers employing eligible individuals in competitive integrated employment in a competitive integrated setting and who are authorized to do business in Kansas. “Targeted employment business” does not include a community service provider. These provisions expire on January 1, 2028, except those credits earned in tax year 2027 may be awarded by the Secretary of Revenue.