This post is Part Two of a three-part series on the topic of Sterling Health Services Administration‘s new Flexible Benefit Plans. Part Two focuses on advantages of Flexible Benefit Plans to employees and employers as well as why Sterling is a provider of choice. Part One, published August 9, 2010, introduces Flexible Benefit Plans. Part Three, to be published this week, addresses frequently asked questions regarding Flexible Benefit Plans.
Flexible Benefit Plans Advantages to Employees
- Using Flexible Benefit Plans–Healthcare FSAs, Dependent Care FSAs, and Transit/Parking benefits-employees can reduce their taxable income and use the income reduction to pay for qualified expenses that otherwise would have been paid with after tax dollars.
- Tax savings to the employee include federal income tax, and in most jurisdictions, state and local income taxes. In addition, employees do not pay Social Security and Medicare tax (currently 7.65%) on the amount excluded from income.
- Healthcare FSAs can be set up without a health insurance plan so more employees can participate.
- Both employers and employees may contribute to the Healthcare FSA and Transit/Parking benefit. Only employees may contribute to the Dependent Care FSA. Employers cannot restrict the use of funds, even if they contribute. Use of funds is dictated by IRS code.
Flexible Benefit Plans Advantages to Employers
- Benefit Savings: When salaries are reduced, the cost to the employer for benefits related to salaries may also decrease. The greatest savings to the employer is often the employer portion of Social
Security and Medicare, which currently equals 7.65% of each dollar of salary reduction (1.45% for those covered only by Medicare and not by Social Security).
Other salary-related benefits that may result in employer savings include the following:
- Unemployment and workers compensation
- Short and long term disability coverage
- Life insurance
- Pension – unless the pension statutes or ordinances are revised, the employer’s funding and the employee’s pension benefit in many plans will be based on the reduced salary.
Forfeitures: Employee forfeitures under the “use it or lose it” rule belong to the employer. Forfeitures can be returned to employees on a pro-rata basis, used to reduce employees’ future benefit costs, or applied to FSA administrative fees.
Why Sterling Health Services Administration?
- Leaders: We’re a leading administrator of consumer directed healthcare services that put our clients in control of healthcare spending and in touch with resources to manage their money and their health.
- Expertise & High Touch Service: We provide expert education and superior execution because we know the
health insurance and financial industries. We provide high touch customer service online, on the phone and in person because we understand that our clients deserve it and want nothing less. - Compliance Specialists: We have the expertise to make sure benefits plans are fully compliant with industry and IRS regulations. Banks or other third party administrators operating under “unmanaged” models don’t do that. In short, we eliminate the worry by offering services only available from a company with expertise in health insurance and healthcare financing products.
- One-stop Shop: Flexible Benefit Plans are part of our “one-stop” product suite so that brokers and employers can easily and conveniently get their health services administration needs met by one company – Sterling Health Services Administration.
Part One of this series was published August 9, 2010 and introduced Sterling Health Services Administration‘s new Flexible Benefit Plans. Part Three, to be published this week, addresses frequently asked questions regarding Flexible Benefit Plans.
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