Employers and employees both can save with tax-advantaged accounts
July 13, 2020
The Board of Pensions offers three types of tax-advantaged accounts, which can help employees and employers save on taxes.
When churches and employers complete an Employer Agreement for 2021, did you know that tax-advantaged accounts can be added to the benefits lineup for less than $50 per employee per year?
The Board of Pensions offers three types of tax-advantaged accounts through a partnership with Further — a national leader in health savings and spending account administration — that may be offered to ministers and employees:
Healthcare flexible spending accounts (healthcare FSAs) allow participants to pay for eligible medical, dental, and vision expenses, such as deductibles, copayments, and copay amounts for doctor's office visits and prescription drugs — all with pretax dollars. You may offer it to employees eligible to enroll in the PPO or EPO option of the Medical Plan, or another eligible medical plan you offer.
Dependent care flexible spending accounts (dependent care FSAs) can be used to pay for eligible expenses for children under age 13 and certain older family members. Examples of eligible expenses include in-home childcare, payments to licensed day care facilities, before- and after-school programs, and adult day care. You may offer it to any employee because there is no minimum hourly work requirement for participation.
Health savings accounts (HSAs) may be offered to employees enrolled in the high deductible health plan (HDHP) option of the Medical Plan. HSAs can be used to pay for qualified healthcare expenses, including the annual HDHP deductible and copayments.
These tax-advantaged accounts help employees save money on eligible expenses — and employers can save, too. Because FSAs are funded through pretax payroll deductions, employers who offer these accounts do not pay FICA taxes on contributions from employees who are not ministers.
Employees generally make contributions to their HSA through pretax payroll deductions. These contributions are exempt from federal income and FICA taxes. For ministers of the Word and Sacrament, these contributions are also exempt from SECA taxes.
What are the costs?
Employers pay $3.90 per employee per month for each employee who establishes a healthcare and/or dependent care FSA. Only one fee is charged per employee, whether the employee has one type of FSA or both.
Employers pay 75 cents per employee per month for each employee who establishes an HSA.
Further bills each employer directly for these monthly fees. There are no setup or other annual fees for these accounts.
How may we serve you?
We’re available to answer questions and provide assistance Monday through Friday, 8:30 a.m. to 7 p.m. ET, as you make benefits decisions. Call us at 800-773-7752 (800-PRESPLAN).