In the last several years, the cost of healthcare benefits has been increasing by double digit figures putting a lot of pressure on the business owners who provide medical coverage to their employees. This pinch is being felt in large and small companies including dental offices. As the most sought after employment benefit, offering major medical coverage is a way to attract and keep the best employees in your dental office and to protect you and your family, but increasingly, more costs are shifting from the employer to the covered individuals. How can your dental office help your employees with these additional out-of-pocket costs?
One way is to look into alternatives for healthcare coverage to enhance the benefit you provide. FlexSystem, Section 125, FSA Plans can be an attractive way to help you and your employees pay your portion of healthcare costs with pre-tax dollars.
What is FlexSystem?
FlexSystem is an IRS Code Section 125 Cafeteria Plan that is a flexible spending account wherein covered individuals can use pre-tax contributions to fund their FlexSystem account and then use these dollars to pay for qualified medical expenses. With FlexSystem, your office would use a third party administrator (TPA) to set up and administer the plan to ensure tax code compliance. FlexSystem is a great supplemental benefit to your existing health insurance, or can be sued without a major medical insurance plan in place.
How does it save money?
FlexSystem can save covered individuals money by allowing them to pay for out-of-pocket medical expenses with pre-tax dollars. Participating businesses can also save an average of $150 per employee per year in payroll taxes based on savings in social security taxed that do not need to be paid on employee wage contributions to FlexSystem. These savings to dental offices and all individuals covered under the plan can be significant and can help you and your employees afford medical treatments that will keep everyone on the dental team healthy and satisfied with your benefit plan.
How does it work?
FlexSystem allows employees to select an amount to fund their plan through payroll deduction to be used to pay for qualifying medical expenses on a pre-tax basis. These pre-tax dollars will accumulate in the FlexSystem account and can be used for qualified expenses for covered individuals and their dependents. Section 125 plans, also known as Flexible Spending Accounts, can be structured to include a variety of benefits.