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Spending Account Options for Employees

Offering spending accounts to your employees can be an effective way to contain health costs for both your business and your employees. Learn about the many options available to groups of all sizes.

UPMC Consumer Advantage
Flexible Spending Accounts (FSAs) FSAs help your employees to save money and use pretax dollars to pay for eligible expenses. We offer FSAs for health care and dependent care expenses.
Health Reimbursement Arrangements (HRAs) Your employees can use HRAs to pay for their deductible and other out-of-pocket expenses associated with their insurance plan only.
Health Savings Accounts (HSAs) Your employees can use HSAs in combination with a qualified high-deductible health plan. HSAs allow your employees to use tax-free dollars to pay for qualified health care expenses that their health insurance doesn't cover.
Qualified Transportation Accounts (QTAs) QTAs help your employees save money and use pretax dollars to pay for eligible transit and parking expenses related to their commute to work.

Flexible Spending Accounts

A flexible spending account (FSA) is a voluntary IRS-approved plan that allows your employees to pay for eligible medical, dental, vision, dependent care, and transportation expenses for themselves and their families with a portion of their salary that is not taxed.

Offering an FSA to your employees is a cost-effective way to enhance your benefits package and make it more competitive. You may also reduce your payroll taxes, including Social Security and Medicare.

Employees can use their tax-free savings to pay for qualified out-of-pocket health care expenses such as pharmacy and office visit copayments. As the employer, you don’t pay payroll taxes on the savings your employees accumulate.

Health care flexible spending accounts: Your employees can use their health care FSA to pay for up to $2,550 in qualified health care expenses. This includes medical, dental, and vision expenses, plus prescription drugs that are not covered by their insurance plan. This includes copayments and deductibles. FSA contributions are automatically debited from employees’ paychecks.

Employees have instant access to their accounts with a UPMC Consumer Advantage® debit card. They use funds in the account to pay for qualified health care expenses at participating merchants — from physicians and dentists to local pharmacies and vision providers. Eligible health care expenses are deducted automatically from the employee’s available balance. If part of your plan design, health FSAs allow rollovers of up to $500 at the end of the plan year, to be used for qualified health care expenses incurred in a subsequent plan year.

These accounts have annual maximums that are subject to change by the IRS.

Limited purpose health care flexible spending accounts: Similar to a health care FSA, a limited purpose health care FSA reimburses only dental, vision, and preventive care. Participation in this type of FSA allows employees to participate in a qualified health savings account.

Dependent care reimbursement accounts: Your employees can set aside up to $5,000 annually to offset costs associated with the care of eligible children or elderly dependents. (Employees may set aside up to $2,500 if they are married and file separate federal income tax returns.)

These accounts have annual maximums that are subject to change by the IRS.

Health Reimbursement Arrangements

HRAs are employee spending accounts that employers fund. Your employees can use their HRAs to help pay for health care deductibles and other out-of-pocket expenses.

Funds that the employer contributes to the HRA are not considered wages and are not subject to income taxes, FICA (Social Security and Medicare), or workers’ compensation.

Health Savings Accounts

HSA is a savings account that employees can use to pay for qualified health care expenses. Employees own their HSAs and can contribute pre-tax dollars to them through payroll contributions.

HSAs must always be linked with a qualified high-deductible health plan (QHDHP), as mandated by the federal government. Employee contributions are tax-free, interest earned is tax-free, and dollars spent on qualified health care expenses are tax-free. Employees can also invest their dollars once they reach a certain level of savings.

Employees can set up easy payroll deductions to contribute to their HSA and/or make contributions on their own. Common eligible expenses include copayments and coinsurance, doctor and dentist visits, eyeglasses and eye exams, and health care supplies such as bandages and wraps.

Qualified Transportation Accounts

A QTA is an account that allows employees to make pre-tax contributions to pay for qualified transit and parking expenses related to their commute to work.

Employers that offer a QTA option can also allow funds to rollover from year to year.