| EMPLOYER
SERVICES OFTEN OFFERED BY CARRIERS
Section 125
Most
carriers can set up and implement a
pre-tax section 125 at little or no
charge when you offer their voluntary
programs. The plan features flexible
spending accounts, including Medical
Reimbursement (Section 125) and Dependent
Day Care (Section 129) accounts. The best
plans allow employers to strengthen
benefits packages and provide employees
with access to the power of pre-tax
dollars. The money that employees save in
taxes may allow them to add more
customized portable benefits and/or pay
for uncovered medical expenses.
What
other people say about Section 125's.
Section
132
Section
132 Transportation expense programs allow
employees to use pre-tax dollars for
parking and transit costs within certain
governmental limits. Check to see if the
carrier offers a ready-made Section 132
package, including signature-ready plan
documents, salary redirection agreements,
eligibility maintenance, claims
processing and check issuance.
Medical
Savings Account
Established
by Congress in 1997 as a four year pilot
and currently part of the 2002 Patient
Bill of Rights with pending federal
legislation to be concluded in
approximately two months. Self-employed
individuals or small businesses with 50
or fewer employees can participate in an
MSA. Currently an individual can
contribute 65% of the annual deductible
and a family can contribute 75% of the
annual deductible to an MSA annually.
Federal legislation soon to approve
eligibility for all individuals and small
businesses in addition to 100% of the
annual deductible may be contributed to
the MSA.
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Benefits
of a Medical Savings Account
Tax
advantages
The
pretax contributions to an MSA reduce
annual taxable income. Savings/retirement
benefits. Money in the MSA that is not
used to pay medical expenses accumulates
tax-deferred until retirement. In
addition, most plans offer investment
options that allow the funds to accrue
significant interest. Upon retirement,
the individual can continue to use their
MSA funds tax-free to pay for medical
expenses, or withdraw the funds and pay
ordinary income tax. Lower premiums.
MSAšs use a high deductible health
insurance plan for catastrophic coverage.
Premiums for the high-deductible plans
are substantially lower than premiums for
a traditional $500 deductible/$20 co-pay
plan. More control. MSA owners can choose
which providers and services to use. Many
services not usually covered by
insurance, such as eyeglasses, contact
lens, orthodontic treatment are just a
few examples, can be paid using the MSA.
Ready access to funds. MSaver administers
and provides easy access to MSA funds
through check-writing privileges and/or
debit cards, or simply through written or
phone-requested disbursements.
Portability. MSAšs are portable and
belong to the individual.
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