UPMC Consumer Advantage offers a variety of spending and reimbursement account options. Learn what each account option offers and how they differ.
Spending Account Options
- Flexible spending accounts (FSAs)
- Health reimbursement arrangements (HRAs)
- Health savings accounts (HSAs)
- Health Incentive Accounts (HIAs) with debit card
- Qualified transportation accounts (QTAs)
- Dependent care reimbursement accounts
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.
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 $2,700 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.
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.
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
Employees can use an HAS to pay for qualified health care expenses. Employees own their HSAs and can contribute pretax 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.
Health incentive accounts
A health incentive account is a reimbursement account tied to a medical plan and is used to pay qualified out-of-pocket medical expenses for subscribers and their covered family members. HIAs are funded by monthly premiums. Funds in an employee’s HIA can be automatically applied to covered expenses or a debit card can be provided for manual payment of qualified expenses.
Qualified transportation accounts
A QTA allows employees to make pretax 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 roll over from year to year.
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.