VOLUNTARY (EMPLOYEE PAID) BENEFITS
Voluntary (Employee Paid) benefits, sometimes referred to as ancillary, are additional insurance products, plans or programs which an employee can purchase through their employer, via payroll deductions, at a discounted group rate to supplement their employer-paid benefits.
Examples of voluntary or ancillary benefits offered are listed below.
– Life Insurance
– Disability Insurance
– Dental and Vision Plans
– Long Term Care
– Heart Attack/Stroke
– Critical Illness
FLEXIBLE SPENDING ACCOUNT
Flexible Spending Account (FSA) is a cafeteria plan under Section 125 of the tax code and allows for benefits to be paid with pre-tax dollars which results in tax savings to both the employee and the employer.
The average working employee in America spends thousands of dollars annually on certain types of medical benefits, daycare expenses and transportation services. By participating in an FSA, an employee’s taxable income is reduced, which increases the percentage of pay they take home and allows them to pay for these benefits and services with the pre-taxed dollars, in essence giving them a discount on these services.
Here’s how it works.
This tax-favored savings account is funded solely by the employee through regular pre-tax payroll deductions. Employees elect how much they want withdrawn from each pay period, which can be changed annually or upon a qualifying event such as marriage or divorce. Throughout the plan year, funds can be withdrawn from the account (tax-free) to pay for eligible medical, dental, vision, prescription and dependent daycare expenses. Some FSAs include work-related parking and transit costs. The administrator of the FSA account can issue a debit card that is tied to the FSA making it easy to use the account when needed.
Premium-Only Plan lets employees purchase their own individual insurance with pre-tax dollars, potentially saving employees thousands annually in taxes and premiums combined. Employees elect a set amount of pre-tax dollars to be deducted from each payroll. Employees purchase an individual health insurance policy of their choice, and they are responsible for paying the monthly premium directly to the carrier. Employees are then reimbursed by the employer for the monthly premium with the pre-taxed dollars