Health Savings Account (HSA) vs Flexible Spending Account (FSA)

HSA vs FSA infographic

During open enrollment, you will have important decisions to make, such as utilizing either a health savings account (HSA) or a flexible spending account (FSA). The process may feel overwhelming, but it does not have to be. Understanding the key differences between HSAs and FSAs can help you make the right choice for you.

HSAs and FSAs are tools that you can use to hit two main goals: saving for healthcare costs and protecting your money from taxes. FSAs and HSAs are both tax-advantaged savings accounts that allow you to pay for qualified medical expenses, such as doctor’s visits and prescription medications, with pre-taxed funds. While HSAs and FSAs are structurally similar, they are intended for different purposes and meet different needs, including who is eligible to enroll and when savings expire. Understanding the differences between an HSA or FSA is crucial to picking the best fit for you and your family.

HSA vs FSA infographic

Key Takeaways:

  • You must have a high-deductible health plan (HDHP) to qualify for an HSA.
  • Funds from your HSA roll over year after year while FSAs work on a “use it or lose it” basis, meaning any funds not spent by the end of the plan year will be lost.
  • Some HSAs offer investment options.
  • HSA holders cannot spend more than the funds that have been deducted from their paycheck. However, they can file for reimbursement later in the year.
  • You can use your FSA to cover eligible healthcare expenses early in the year, as long as you plan to contribute what’s necessary to cover those expenses by the year’s end.
  • The biggest benefit of the FSA is that withdrawals can be made for childcare expenses, as well as medical expenses.

Which option should you choose?

In general, people with few prescriptions or medical conditions are likely to benefit more from an HSA and HDHP because even though HDHPs are some of the most inexpensive health plans available, the trade-off is very high out-of-pocket limits. If you had high medical costs, you would still have a significant amount to pay out of pocket, even if you contributed the maximum to your HSA.

People with high medical costs can often find better savings with a more generous plan than an HDHP, disqualifying the HSA as an option. Other health plans cost more per month but cover more costs upfront. While FSAs offer less flexibility than HSAs, an FSA will still help you save money, and can be paired with any plan.

To learn more or explore your options, contact VensureHR. Our benefits specialists can provide you insight to which healthcare plan and benefit option best suit your employees’ needs.

January 2021: New DOL Guidance on Mandated Notices in a Virtual Workplace

Update Applicable to:
All employers.

What happened?
On December 29, 2020, the DOL issued Field Assistance Bulletin 2020-7, which provides guidance to the DOL’s field staff on enforcing posting requirements in circumstances here there is no traditional workplace.

What are the details?
Bulletin 2020-7 covers many requirements over its five pages. Here are the key points:

  • Notice requirements generally appear in one of two varieties: (1) one-time notice and (2)
  • continuous posting.
  • Employers may satisfy one-time notice requirements (e.g., as required by the Service Contract Act) by email delivery if employees customarily receive emails from the employer.
  • For continuous-posting requirements (e.g., FLSA, FMLA, EPPA, and the Davis-Bacon Act), the guidance makes a distinction between employers with only some remote employees and employers with an entirely remote workforce.
  • For employers with some remote workers, physical posters are required for on-site employees, and the DOL “encourages” electronic posting for the teleworking employees.
  • Employers with an entirely remote workforce may satisfy continuous-posting obligations using electronic-only means if they meet the following requirements:
    • All employees exclusively work remotely;
    • All employees customarily receive information from the employer via electronic means;
    • All employees have “readily available access” to the electronic posting at all times, e.g., via an internal or external website or a shared network drive or file system. The DOL notes that whether access is readily available is fact-specific and requires, for example, that employees be able to access the notice without having to request permission.
    • The employer must take steps to inform employees of where and how to access the notice(s) electronically.
  • If the employer has multiple groups of employees to whom different notices apply, the employees must be able to “easily determine” which posting is applicable to them.
  • For laws that require posters be visible to applicants (e.g., EPPA), virtual-only posting is permitted if the hiring process is itself conducted remotely and the applicants have readily available access to the electronic posting at all times.
  • The DOL’s guidance only applies to federal posting requirements enforced by the DOL. It does not address posting requirements enforced by other federal agencies (e.g., EEOC) or state-mandated posting requirements.

The U.S. Department of Labor issued Field Assistance Bulletin 2020-7 can be found here.

What do employers need to do?
Employers who have moved to virtual workplaces should review any necessary posting requirements. If employers have any concerns or questions they should reach out to their CRS or CRM.

January 2021: Cal/OSHA Updates FAQs for COVID-19 Emergency Temporary Standards

Update Applicable to:
Most California employers. Excluded are workplaces with one employee, workplaces that are now working remote, and employees who are covered by the Aerosol Transmissible Diseases regulation.

What happened?
California Occupational Safety and Health (Cal/OSHA) further updated its COVID-19 Emergency Temporary Standards Frequently Asked Questions in an attempt to provide more clarification and answer questions the agency has received about the COVID-19 Emergency Temporary Standard (ETS) that went into effect November 30, 2020.

What are the details?
The new questions touch on the following subject:

  • Exclusion Pay and Benefits
  • Testing
  • Exposed Workplace/Outbreaks
  • Return-to-Work Criteria
  • Possible Critical Infrastructure Waivers
  • Enforcement
  • Physical Distancing
  • Vaccines

The full FAQ can be found here.

Specifically, the new questions and answers are listed at the bottom of the webpage under the “FAQ Revision and Updates” header.

What do employers need to do?
An employer with questions regarding the COVID-19 Emergency Temporary Standards should review the FAQ to see if they have addressed their concern.

January 2021: DACA Employees Can Use Form I-765 and Their EAD for Form I-9

Update Applicable to:
Any employers utilizing workers abroad who utilized Form I-765.

What happened?
The DHS has announced that employers may use unexpired Form I-765, Employment Authorization Documents to temporarily complete Form I-9s.

What are the details?
When completing Form I-9, employees may choose to present their unexpired Form I-765, Employment Authorization Document (EAD) with Category code of C33 that was issued on or after July 28, 2020, along with an I-797 Extension Notice issued by USCIS that shows a one-year extension of their deferred action and work authorization under Deferred Action for Childhood Arrivals (DACA). In Section 1, employees may enter the end validity date from the notice in the “Authorized to Work Until” field. If an employee presents this document combination, the employer must enter the end validity date from the employee’s notice in the Expiration Date field in Section 2. Enter “DACA Ext. in the Additional Information field.”

Employers may re-verify a current employee before reverification is required if they present this document combination to you. Enter the end validity date from their notice as the Expiration Date in Section 3. Enter DACA Ext. in the Additional Information field in Section 2.

The official announcement can be found here.

What do employers need to do?
An employer’s HR department should follow the above directions from the DHS when filing Form I-9s for the applicable employees.

January 2021: USCIS Modifies H-1B Selection Process

Update Applicable to:
Any employers looking to utilize the H-1B visa program.

What happened?
U.S. Citizenship and Immigration Services has announced a final rule that will modify the H-1B cap selection process, amend current lottery procedures, and prioritize wages.

What are the details?
Previously the H-1b visa program awarded the visa to companies on a lottery basis, where companies would all have a relatively equal chance of winning the award. The new system will instead award the H1b visas with a focus on higher paid wages, making the visas much more competitive in respect to wages.

These rule changes will only affect H-1B registrations (or petitions, if the registration process is suspended) submitted by prospective petitioners seeking to file H-1B cap-subject petitions. It will be implemented for both the H-1B regular cap and the H-1B advanced degree exemption, but it will not change the order of selection between the two as established by the H-1B registration final rule.

The final rule can be found here.

What do employers need to do?
Employers looking to utilize the H-1b visa program should keep in mind the new selection process when submitting petitions for the visa program.

Incorporating Tax Planning into Risk Management Strategy

Female tax analyst reviewing risk data charts

While larger corporations like Apple, Microsoft, Amazon, and Facebook face recurring scrutiny for avoiding tax liability, small to mid-sized businesses face other tax liability issues. Regardless of the size of your business, it is imperative for businesses to implement safety nets and instill proper tax compliance best practices. To help combat the scrutiny, potential penalties, and noncompliance of tax liability, industry experts suggest incorporating tax planning into risk management strategies.

Understanding Risk Management

Risk management is the process of identifying potential exposure to damage, injury, illness, liability, loss, or negative impact to a business and mitigating it through preventive action. According to the American Accounting Association – Management Accounting, developing a board of directors to oversee a company’s risk management results in balanced tax planning risks and rewards.

According to a 2014 annual proxy disclosure statement, board of directors who proactively participate in risk management oversight tend to experience lower taxes on average and lower risks of damaging the company reputation.

The board should utilize risk management’s identification and evaluation of the business’s risks to inform strategic decisions to achieve growth goals. Boards that are effective establish a culture founded in maximizing positive outcomes (i.e., lower tax payments) and mitigating negative outcomes (i.e., higher tax risk).

To help businesses incorporate tax planning into risk management strategies, here are three factors to consider.

How to Incorporate Tax Planning into Risk Management Strategy

1. Own the risk oversight responsibility.

Instead of delegating risk oversight to other organizational members, integrate risk oversight into board of directors’ overall governance. This promotes risk management as a critical component of company leadership and best practices.

To integrate risk oversight into board of directors’ overall governance, the board should formally and publicly acknowledge such governance in its annual proxy statement. A formal and public statement sets the tone for management and integral stakeholders that risk oversight is top of mind. Additionally, it holds the board accountable to include risk management into evaluations and decision-making strategies, including tax-related policies.

2. Regularly monitor risk-related activities.

Taking a holistic approach to risk management allows boards to identify, evaluate, and improve business strategies based on strategic decisions that may cause risks in other areas of the business. Developing regular board discussions about identified risks, evaluation of new risks not yet under management’s review, and proactively reviewing risk management policies and procedures help businesses develop best practices and ensure processes are in place to address risk exposures, including tax-related issues. This is vital to taxes because tax laws are constantly changing, which requires regularly monitoring and updating tax compliance to prevent tax-related risks. Adding consistent, systematic monitoring of risks can help the board navigate tax-planning initiatives.

3. Develop a risk mindset.

Board of directors oftentimes set the tone for appropriate risk-taking and ensuring decisions are based on well-informed strategies. The board should evaluate potential tax saving strategies against tax-related risks. By keeping risk top of mind during tax-planning initiatives, risk management and tax planning can work simultaneously.

From tax compliance and risk management strategies, to business basics 101, partnering with a PEO like VensureHR can remove the burden from business owners and allow them to refocus on what matters most: growing their business. To speak with a risk management specialist, contact VensureHR today!

 

Source:
Harvard Business Review

 


Insure Your Company.com

Harvard Business Review

A Timeline of Employee Benefits

Employee Benefits Timeline

Employer-sponsored benefits haven’t always been a part of the new hire process. In fact, most of the legally required employee benefits that candidates have come to appreciate as part of their onboarding process, weren’t developed until the early 1900s. Employee benefits, as we now know them, are the accumulation of different programs, research, plans, and policies, that were all put in place deliberately to improve the lives of employees and strengthen the bond between the employer and employee.

Traditional benefits include everything from paid time off and holiday pay, life insurance, retirement benefits, and healthcare, while voluntary benefits can include everything from tuition reimbursement and stock ownership, to child care stipends. Benefits required by law include employer contributions to programs like Social Security, Medicare, and workers’ compensation.

Check out this timeline for a high-level history of how employees went from paying all benefits out-of-pocket to employer-sponsored benefit plans. To learn more about employer-sponsored benefits that meet the changing needs of your employees, click here.

Employee Benefits Timeline

2021 New Year Business Goals and Strategies

Businessman viewing 2021 new year mountain landscape

A new year oftentimes signifies a new chapter, which can be applied to personal and professional goals. As businesses continue recovering and addressing the COVID-19 situation into the new year, many are also strategizing new business goals. Here are a few business goals and strategies to consider in the new year.

  • Revamp Marketing. Perhaps your company underwent some hiccups in response to COVID-19’s impact on the economy. From developing timely, well-written employee and client communications, to pausing marketing efforts not directly impactful to the immediate clients’ needs, businesses likely had to adapt their approach to how they operate and finding a work-life balance. The new year is the time to re-evaluate your marketing efforts. Look at what worked and what didn’t – revamp what works and prepare to integrate it into the new year business strategies. For example, perhaps you sent out a communication that wasn’t effective (i.e., low engagement). Try A/B testing different aspects of the communication, such as subject lines, placement of links and buttons, images, etc. Stay in-tune with the latest social media marketing trends. Experiment with paid ads. Whatever marketing method that could improve your business, now is the time to try.
  • Improving Community Outreach. Even if you’re unable to donate monetary contributions, there are plenty of other ways to give back to your community. Discounts to your products and services that directly assist with a problem the community is facing (i.e., South Carolina Manufacturers Alliance donated face masks to law enforcement and two school districts), creating a volunteer day as a company-wide effort to volunteer at local organizations, and matching employee donations made to qualifying nonprofits are all examples of how you may improve or integrate community outreach.
  • Promoting Professional Development. January is National Mentoring Month, where business leaders and employees focus on collaboration and promoting networking and mentorship to young professionals. A great way to help incentivize employees in the new year is promoting professional development. Consider starting a mentoring program that raises awareness of the value mentoring offers, invests in high-performing workers to promote their roles to young professionals interested, and improve recruiting efforts. If you already have a mentoring program, conduct an audit to see what can be improved, as well as consider additional professional development opportunities, such as webinars, business summits, and tuition assistance.
  • Prioritizing Health and Wellness. Due to the nature of the COVID-19 pandemic, prioritizing health and wellness should be incorporated into your business goals and strategies. Across the globe, many countries only allocate 2% of their national health budgets on mental health. Yet, mental health-related issues* have skyrocketed as a direct impact of COVID (i.e., social isolation, financial disparities, and bereavement). Additionally, people cope with stress, anxiety, and other emotions stemming from the COVID-19 pandemic differently. The closure of fitness clubs, restaurants, and remote work have led to unhealthy habits, such as sleep disruption or altered sleep patterns, changes to eating habits, decrease in physical activity, and increased use of substances. Some ways to help combat unhealthy habits may include revamping employee benefit plans to employees’ needs, exploring ancillary benefits (i.e., telehealth, cross-border benefits, and financial wellness), and developing additional resources as needed (i.e., employee assistance program).

If you’re looking for innovative ways to improve your business strategy or need assistance in achieving your business goals, consider partnering with a trusted professional employer organization (PEO) like VensureHR. Our industry experts can provide you best practices, resources, tools, and exceptional support to ensure you boost your success in the new year. Contact us today to learn more!

 

*The Centers for Disease Control and Prevention has provided mental health information and resources.

 

 

Sources:

Entrepreneur

Inc.com


World Health Organization

Medical News Today