Why FSA Instead of HSA?

[somarco]

that's the risk the employer takes by allowing the FSA deductions to be pre-tax and that he can't recover the money

I believe the money can be deducted from the last paycheck, assuming the FSA administrator has completed the accounting in time.

 

[ABC]

A small group - 5~10 participants maybe. Do they need a separate administrator for the plan (the current payroll service can't just add the darn thing?)

Your looking at a lot of admin cost to set up an FSA for this size group unless the payroll company will do it for free. The only time I have seen payroll companies do this is when they have a PEO plan in place.

With this size group your better off going one way or the other. If you set up an HSA with an FSA is the controller/owner going to be able to explain to a new employees what they are doing? Other wise you should prepare yourself to do employee education on the plan choices and be able to explain all the tax advantages to both plans. Then again if that is what it takes to pick up a new client ya have to do it.

 

[Franz Kafka]

Your looking at a lot of admin cost to set up an FSA for this size group unless the payroll company will do it for free. The only time I have seen payroll companies do this is when they have a PEO plan in place.

With this size group your better off going one way or the other. If you set up an HSA with an FSA is the controller/owner going to be able to explain to a new employees what they are doing? Other wise you should prepare yourself to do employee education on the plan choices and be able to explain all the tax advantages to both plans. Then again if that is what it takes to pick up a new client ya have to do it.

The owner doesn't want anything complicated (what a surprise). I think he prefers (still talking) to pay the premiums on the HDHP and have the EEs contribute to HSA. He wants to have both under POP (no FSA) so he could also save on FICA. Would setting up POP only be feasible for a group of this size?

 

[bill3173]

I believe the money can be deducted from the last paycheck, assuming the FSA administrator has completed the accounting in time.

Are there any national carriers in particular that you would recommend for the hsa, fsa coupling?

This seems like a good package deal to offer an employer of any size, and I'm working on a case now that really lends itself to this sort of thing.

When is your next fsa seminar, and how much do you charge?

 

[somarco]

I don't trust carriers to do a good job on admin. Look to independent administrators. Probably some good ones in your area.

Admin America is local and I know the owner. They do a good job.
Admin America is an independent Third Party Administrator of IRS Section 125 Flexible Spending Arrangements

Sorry, but my next seminar is sold out. Perhaps I am not charging enough to weed out the riff-raff.

 

[bill3173]

I don't trust carriers to do a good job on admin. Look to independent administrators. Probably some good ones in your area.

Admin America is local and I know the owner. They do a good job.
Admin America is an independent Third Party Administrator of IRS Section 125 Flexible Spending Arrangements

Sorry, but my next seminar is sold out. Perhaps I am not charging enough to weed out the riff-raff.

Thanks for the info. I haven't done any group hdhps' but this seems to be the way to offer them and I've got one in particular with an immediate interest.

I'm glad that this topic was introduced. Instead of pushing applications around on my desk last night and trying to figure out reasons to walk up and down the hall and not work on them, I studied up on the FSA and I can't think of a good reason not to have one, if you have a group hdhp in place.

Based on what I've read, and what you've said here, it appears to be a winning situation all the way around.

 

[somarco]

The FSA still makes sense, depending on the size of the group. While smaller companies may want or have one, the admin costs usually outweigh the advantages.

POP is good for carriers and agents who want to peddle a lot of policies but I have never been a fan of that approach.

For medical, dental & vision the HSA or HRA is preferable IMO. FSA still has application but not as attractive as the HSA or HRA.

http://www.coredocuments.com/docs/HSAorHRA.pdf

Publication 969 (2008), Health Savings Accounts and Other Tax-Favored Health Plans

The only reservation I have about group HDHP's is the pricing. The ones I have priced for clients don't make sense when compared to copay plans. Ran rates on a 5 life group that is renewing.

Very rich copay plan ($2000 ded then 100%) like they have now is $1400 while HDHP with same deductible then 100% was $2000. Go figure.

 

[ABC]

The owner doesn't want anything complicated (what a surprise). I think he prefers (still talking) to pay the premiums on the HDHP and have the EEs contribute to HSA. He wants to have both under POP (no FSA) so he could also save on FICA. Would setting up POP only be feasible for a group of this size?

Setting up a POP is very easy.
On the high end it will cost your client $300 set up.
I use www.ceridian.com they are on the higher end but they have good customer service.

 

[stuy119]

Franz-

TASC in Wisconsin is supposedly excellent.

TASC (Total Administrative Services Corporation) | Employee Benefits | Section 105 HRA | Section 125 FSA | COBRA | Debit Card

 

[Franz Kafka]

Thanks guys. I'm somewhat familiar with both administrators.