Maximize Your Tax Savings

Are you satisfied with your current tax savings?

Many employers find themselves spending time and resources administering Section 125 Plans without seeing the tax savings they hoped for. Reimbursements accounts, such as Health Care Flexible Spending Accounts (HCFSAs) and Health Savings Accounts (HSAs) can often be even more confusing.

When employees don’t understand how pre-taxed benefits work, they are less likely to select them during their annual enrollment. This confusion and lack of knowledge typically leads to less overall participation, and as a result, fewer tax savings for both you and your employees.

We’ve found that participation can often be improved with increased education. Implementing a comprehensive education plan helps give employees confidence in their choices, ultimately increasing participation and tax savings for both them and you.

Employers, on average, save $115 per participant in a Section 125 Plan on FICA alone.1

How Does Section 125 Work?

Employee Education is Key

Benefits are confusing. Especially when it comes to understanding the differences between reimbursement accounts and choosing the right benefits, employees need help.

When employees understand their benefits, they will be more satisfied in their selection and are more likely to keep the coverage year after year. Additionally, employers are more likely to retain employees who understand the relative value of their benefits package.3

Our strategy is not only to communicate during enrollment, but before, during, and after. With the help of videos, custom benefits sites, and other educational resources, we can meet the needs of employees with different learning styles.

Learn More About Our Communication and Education Strategy 

Which reimbursement account is best for my organization?

When it comes to reimbursement accounts, the differences can be confusing. How do you determine which type pairs best with your health plan offering(s)?

American Fidelity's account managers can help you implement and use reimbursement accounts to work with your medical insurance.

Learn More About Reimbursement Accounts 

Download Chart

  Healthcare FSAs HSAs HRAs

Funding

Employer

Employee

Employer

Employee

Employer

Contributions

Limited by IRS annual maximum

 

Limited by IRS annual maximum

 

No limit

 

Health Plan Requirement

None

Qualified High Deductible Health Plan

Generally, must be enrolled in Employer’s major medical plan.

Carry Over

Optional $500 carryover

 

Yes

Yes, if permitted by plan 

Eligible Expenses

Internal Revenue Code defines the eligible expenses

Internal Revenue Code defines the eligible expenses

Employer chooses which of the Internal Revenue Code defined eligible are eligible for reimbursement

Helping You Be Compliant

Do you know where your Section 125 Plan document is located? When was the last time it was updated? Surprisingly, many employers forget to update their plan documents as their benefits change.

Our dedicated Section 125 compliance team and account managers are trained to help. We provide:

  • Annual Plan Document maintenance
  • Discrimination testing worksheets
  • Employee election forms
  • Correspondence on compliance changes throughout the year
  • Education and communication to employees

Learn More About Our Section 125 Plan Administration Services 

Increase Your Tax Savings

Learn how American Fidelity’s tax saving strategies could help your organization.