Premium Only Plans vs. Flexible Spending Accounts:
A Primer
We know that a full-featured BESTflexSM Plan isn’t the best fit for every organization that offers a Premium Only Plan. Employers should understand the differences between the plans, including the estimated tax savings to their organization and the benefits each plan provides to employees.

In a nutshell: What’s involved?
Employers may consider offering FSAs to add greater value to their current benefits package. Because FSAs give more control over expenses and help save money, they are a big win with employees. Once an employer settles on a plan design, implementing the new plan involves a few additional steps.

Educating eligible employees consists of notifying them that the new benefits are available, explaining how the benefits work and how enrolled participants save money on eligible health and dependent care expenses.

Eligible employees enroll in the plan during an enrollment period determined by the employer, usually a two-week period before the start of the plan. Enrolling online is the easiest method for many participants.

Once the plan is set up and they have made their elections, participants can start submitting claims right away. Each claim is adjudicated,  against eligible expenses, documentation and other criteria. Submitting claims online is a desirable feature of any FSA plan. It is important that claims be processed using established IRS guidelines and regulations; to do otherwise could jeopardize the tax-exempt status of the plan.  Once claims are approved, claims are reimbursed to participants.

Reviewing claims payments, account information and other important details of the plan is easiest when the information is available to employers online. An organization’s account information, reports, forms and notices are available when needed. Participant account review, reporting and forms download using the web can also be an incentive for employees to enroll in the plan.

All FSAs are not administered equally
Even though FSAs, as well as your Premium Only Plan, are regulated by the federal government, third party administrators (TPAs), like Employee Benefits Corporation, administer FSAs differently. While federal regulations define plan design, not all TPAs implement the regulations in the same ways. Nondiscrimination testing is still required at plan year end for Premium Only Plans. There are options employers may add to their plan design that add value for participants, but not all TPAs offer or administer some them.

Switching from one plan type to the other involves careful adherence to federal regulations.