Do you want to offer your employees the chance to contribute pretax payroll deferrals to an HSA or FSA? Here are some things you should know about putting an HSA/Flexible spending plan in place:
- The first step is to create a Section 125 plan (sometimes referred to as a Cafeteria Plan) that allows HSA deferrals. This is the only way for a company to give employees a choice between taxable and nontaxable benefits.
- While employers can offer HSA payroll deferrals without a Section 125 plan, the deferrals would be after-tax and treated as income to the employee. Therefore, it would be deductible on income tax returns. This is why it is often worth it to invest time and money in creating a Section 125 plan.
- Using a Section 125 plan benefits both employees and employers. Having access to an HSA helps employees pay their premiums on a pretax basis. Employees and employers save on payroll taxes and employers can avoid some rules associated with HSA contributions.
Sheakley can help!
Our flexible benefit plans give you the ability to offer pre-tax savings to your employees while Sheakley takes care of benefits administration for you. Contact Carrie Lucas at firstname.lastname@example.org or fill out this form to learn more.