FSA/HRA Administration

Flexible Spending Accounts

A Flexible Spending Account (FSA), also known as a flexible spending arrangement, is one of a number of tax-advantaged financial accounts that can be set up through a cafeteria plan of an employer.  An FSA allows an employee to set aside a portion of earnings to pay for qualified expenses as established in the cafeteria plan, most commonly for medical expenses but often for dependent care or other expenses.  Money deducted from an employee's pay into an FSA is not subject to payroll taxes, resulting in substantial payroll tax savings.  One significant disadvantage to using an FSA is that funds not used by the end of the plan year are lost to the employee.

With an FSA businesses receive:

• FICA tax savings for Flexible Spending Account (FSA)contributions
• Seamless automated payroll deductions
• Daily claims processing and daily distribution of spending account payments
• Web access to ADP Flexible Spending Account service and support
• Secure access to Flexible Spending Account plan participant information
• Management reports
• Expert handling of complex Flexible Spending Account issues and requirements

Health Reimbursement Account

A Health Reimbursement Account (HRA) is a federally authorized tax-favored funding program that creates a long-term solution for employers to save money on health care costs.  Employers use the savings from lower premiums to reimburse employees for part of their health care expenses, typically a portion of their deductible.

With an HRA, business can:

• Significantly reduce health insurance premiums
• Create tax deductions
• Improve cash flow
• Meet employee coverage needs
• Achieve company benefit goals

An HRA combined with a high deductible plan offers business better control over their businesses' cash flow, and both they and their employees can realize overall savings, including tax savings.