In an era where employee benefits are consistently gaining significance, employers must evolve to align with their employees' requirements, as those who are satisfied with their benefits are 70% more likely to remain with their employer. As a third-party administrator (TPA) of account-based employee benefits and COBRA, our goal is to help employers create a benefit offering that supports their employees’ wellbeing.

Understanding how certain account types can work together from a compliance perspective, as well as an employee satisfaction perspective, is crucial in determining what you should offer. Employers should understand how the benefits work together to best suit their goals and the wellness of their employees.

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Flexible Spending Accounts

A flexible spending account (FSA) is an account that participants and/or employers can put money towards to pay for eligible expenses, tax-free. Employee contributions to an FSA are exempt from Federal, State, and FICA payroll taxes, so employees save on eligible purchases.

There are three main FSAs that employers can offer:

1. Health care FSA: covers eligible medical, dental, and vision expenses
2. Limited health FSA: covers eligible vision and dental expenses
3. Dependent care FSA: covers eligible day care expenses for children or other dependents

Note that a health care FSA is considered disqualifying coverage for a health savings account (HSA), so employers wishing to offer HSAs to their employees can pair a limited health FSA with an HSA. Pairing these two accounts together means that employers offer their participants a savings and spending account. Participants can then maximize their savings and use their limited health FSA funds on covered vision and dental expenses, and their HSA funds to create a nest egg for the future.

FSAs are subject to compliance requirements such as contribution maximums, expense substantiation requirements, limitations on carryovers, documentation needs, and more. EBC’s Compliance Team helps employers keep up with evolving compliance requirements.

Health Savings Account

An HSA works like a regular bank account and allows accountholders and/or employers to put money into the account that can be used on a tax-free basis for qualified medical expenses. An HSA is owned by the accountholder so the funds are theirs once they’re in the account and will rollover year-after-year. HSAs allow accountholders to have unmatched flexibility when it comes to how they want to use their funds on qualified medical expenses – they can choose to spend when they need to, save for future expenses, or invest to see funds grow quicker.

One significant way to enhance your benefit offering is pairing an HSA with a limited health FSA. Pairing these two accounts together means that employers offer their participants a savings and spending account. Participants can then maximize their savings and use their limited health FSA funds on covered vision and dental expenses, and their HSA funds to create a nest egg for the future.

It's important to note that an unlimited health care FSA cannot be paired with an HSA. because an unlimited health care FSA is considered disqualifying coverage for an HSA. If you're a current health care FSA client and are interested in offering an HSA, our customer service and compliance experts are happy to share their expertise and help you transition to an HSA and limited health FSA.

Health Reimbursement Arrangement

A health reimbursement arrangement (HRA) offers employers the most control to design a benefit that matches and complements their health insurance plan. It's a completely employer-funded health plan that allows employees to be reimbursed for qualified medical expenses up to a set amount each year. The most common HRAs that EBC administers reimburse employees for medical expenses that they incur under their major medical plan up to that plan’s deductible and/or out-of-pocket maximum.

There are a few key options available when it comes to pairing other account types with an HRA.

Employers can pair an HRA with a limited health FSA. The limited health FSA would cover vision and dental expenses, while the HRA covers general health expenses.

Another option is to pair an HRA with a health care FSA. With this option, qualified expenses are generally paid from the HRA first, and the FSA covers additional expenses beyond the HRA funds.

One final option is to pair a limited purpose HRA with an HSA. A limited purpose HRA can be used to cover dental and/or vision expenses, which can be paired with an HSA to cover other eligible health costs.

Lifestyle Spending Account

Looking to enhance your benefit offering to cover more? Lifestyle spending accounts (LSAs) give employers the opportunity to provide their employees with after-tax funds to cover everyday expenses that are meaningful to them.  Employers create the program parameters and get to choose the categories of what employees can spend their funds on.  

Who can benefit from offering an LSA? Pretty much anyone! LSAs are a great addition to any benefit offering, as any employer can offer one, regardless of what other account types they offer. Even though LSAs do not receive the same tax benefits as traditional spending accounts, like an FSA, these accounts can cover a much wider variety of expenses. Depending on which expense categories are covered, employers can help support their employees' financial, mental, social, or physical well-being, and even encourage professional development.

Commuter Benefits

Many companies were forced to temporarily pivot to remote work because of the COVID-19 pandemic. While some employers have made adjustments to offer more remote work opportunities, 65% of employees are required to go in to work part or full-time. This means that many employees are required to commute regularly, which can come at a cost. One way employers can help alleviate expenses from commuting is through commuter benefits – which allows employees to set aside pre-tax funds to cover certain transportation expenses, like parking at work and public transportation/vanpooling to work.

Who may want to offer commuter benefits? Employers who want to provide additional support to commuters or those who are required under local laws. Employers of a certain size in specific metropolitan areas in the United States are required to offer benefits that allow pre-tax contributions on public transit and/or parking expenses. These employers, and those who are looking to provide some tax alleviations for commuters may want to consider offering commuter benefits.

COBRA

COBRA gives workers and their spouse/dependents who lose their benefits the right to continue group health coverage for a limited period of time. Most employers are subject to COBRA, and regulations are complex, so many employers choose to rely on third-party administrators (TPAs), like EBC, to manage their COBRA administration. Penalties for non-compliance, overwhelming workloads, and legal hassles are just a few of the reasons why working with experts is safer than self-administering.

Were you previously self-administering or moving to EBC from another TPA for COBRA administration? We can help ensure you’re up to date with notices!

EBC offers blanket notification services to send all enrolled benefit participants the required initial COBRA notice, whether they received it before or not. Not only does this ensure every eligible individual received the notice, but it also provides the employer with proper documentation that serves as proof if questions were to arise on whether the notice went out and when. This is an often-missed COBRA requirement so we can help you avoid potential penalties.

We also offer COBRA open enrollment services, where EBC sends all required open enrollment information to qualified beneficiaries during the open enrollment period in which employees can add or change coverage.

Billing Services

When offering great benefits, it can sometimes be a challenge for employers to collect premiums directly from their participants. With EBC’s Billing Services, employers can easily collect premiums outside of payroll deductions, by providing EBC with their recurring premium amounts for the year and the list of employees to bill—we do the rest.

With Billing Services, EBC sends a bill to the participant, collects their premium payment, and remits the balance to the employer. This helps remove the administrative load from employers and allows them access to important reports.

Enhance your benefits and your participant experience 

When employers choose to provide multiple benefits with EBC, it not only provides participants with a strong benefit offering, but also allows them to have a great experience with their benefits. Participants can access all their EBC-managed benefits from one, easy to use platform. Additionally, participants who have multiple carded benefits with EBC can use the same Benefits Card for all purchases.

For example, if a participant is enrolled in a limited health FSA and an HSA, the Benefits Card is configured to draw from the appropriate account based on merchant type (i.e., dental and vision) and account type.

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