Additional Plan Options
Employer Reimbursement Plans
In conjunction with the Section 125 Flex Plan or Section 132f TFA Plan, employers can make contributions into a separate account. Eligible employees can then use these funds within the rules of the Flex or TFA Plan.
The most commonly used purposes have been for dental care, eye care, or for amounts which exceed health plan deductibles or copays. For example, a contribution of $100 can be made for an employee specifically designated for either dental care checkups or eye exams. Another example is when plan deductibles are increased from $250 to $1000, the deductible amounts exceeding $500 (up to $1000) will be reimbursed from the employer account.
Back to Top
Limited Purpose Flexible Spending Accounts
Employers offering Health Savings Accounts (HSA) can allow employees to have a Limited Purpose Flexible Spending Account to supplement the HSA. These accounts work like Flexible Spending Accounts, however the allowed expenses are limited to those not covered by the HSA. For example, dental care, vision care, amounts in excess of the HSA limits ($2,600 in 2006), health clubs when prescribed, over-the-counter drugs, and other items excluded from the group health insurance plan.
Back to Top
Self-Insured Dental Plans
In accord with Section 103, 105 and 106 and in conjunction with the Section 125 Unreimbursed Healthcare account, employees can make contributions into a Dental Plan account. Eligible employees can then use these funds for dental coverage. If claims exceed the employees’ contributions, then the employer will provide sufficient funds to pay claims. For example, a contribution of $10 per week can be used for single coverage whereby the employee gets 100% coverage for preventive care, 80% coverage for basic services, and 50% coverage for major services subject to a $100 deductible for basic or major services and limited to $1,000 per year. Orthodontics are usually excluded. Rates should be higher for coverages which can include the employee plus one family member and or a family (usually limited to 3 times the individual plan, e.g. $3,000 per year).
Back to Top
Educational Assistance Plans
Section 127 of the Internal Revenue Code allows employers to provide educational assistance to employees and Section 117 allows for scholarships to dependents. Employers usually establish reimbursement for approved education for either the employees and/or their dependents.
Educational Savings Accounts
Section 529 of the Internal Revenue Code established accounts similar to IRA’s for educational purposes which are funded by employees’ contributions. Working with a financial institution, employers provide payroll deductions to allow employees to set aside funds into separate accounts setup and maintained by each employee. Fees are usually charged to the individual account and paid from investment earnings.
Back to Top
Time Banks
For larger employers who desire to reward good attendance and provide incentives for not being absent, unused Sick, Vacation, and Personnel Time can be banked for future use. The number of days allowed to be banked can be limited. Employees rather than take time off because they might lose it, can set aside days for future use (such as for short-term disability). In addition, some of the time bank may be available as cash. For example, employees can “bank” up to 5 days per year, up to 30 days with the right to receive cash in any year for 5 banked days at 20% of their current salary, or in the event of termination with the right to “cash out” their banked time excluding anytime eligible in the current year.
Back to Top
Legal Services
Section 120 of the Internal Revenue Code established a qualified legal services plan. Employers in association with a law firm can provide legal services whereby employees for a fixed fee get limited access to legal advice. Additional services could be available to employees at their own expense (possibly at pre-negotiated negotiated hourly rate).
Payroll Deductions for various Insurance Coverages
Back to Top
Payroll Deductions
Employers can allow payroll deductions for after-tax dollars to be used for various insurance coverages which are 100% funded by employees’ contributions. Often these types of coverage may be available through and association and payment can be made directly by the employees rather than through payroll deductions. However, if done through payroll deductions employees get group purchasing power along with a simple payment plan. However, a caveat to an employer, although you use an independent insurance carrier and do not endorse any specific coverage or product, you are “guilty” by association. Insurance products offered in this manner can include:
- Group term insurance (and supplements to existing insurance)
- AD& D (accidental death and dismemberment) insurance
- Long-term care
- Long-term disability
- Auto insurance
- Homeowners or Renters insurance
- Umbrella Liability
- Variable annuities (using after tax dollars)
Back to Top
Tax and Financial Planning Services
Similar to the legal services, employers in association with a CPA firm can provide tax and financial planning services whereby employees for a fixed fee get tax services and/or limited financial planning. Additional services could be available to employees at their own expense (possibly at pre-negotiated rates).
Back to Top
|
