Cafeteria Plans

Give your employees the convenience and flexibility of using pre-tax dollars on a variety of medical and dependent care expenses.

Cafeteria plans, also known as a Flexible Spending Account (FSA), allows your employees to use pre-tax dollars to pay medical insurance premiums, out-of-pocket medical expenses and dependent care expenses.*

Cafeteria plans earned their nickname from the flexibility they give employees in choosing from a menu of benefits. With a cafeteria plan, employees authorize employers to deduct a fixed amount or percentage from their before-tax income. Contributions are exempt from both federal income and payroll taxes and are made to a reimbursement account that is used to pay for qualified expenses.

Your employees can run out-of-pocket medical expenses that aren’t covered by insurance (for example: office co-payments, prescriptions, over-the-counter drugs) through the plan. In addition group life insurance premiums that are not reimbursed may be an eligible expense.

The dependent care FSA is an attractive benefit for employees who pay for child-care or long-term care for their parents.

Not sure you understand the difference between a Flexible Spending Account (FSA) and a Health Savings Account (HSA)? Learn more in the comparison chart below.

Contact a business banker representative at (573) 634-0888 or stop by any location to get started.

An HSA offers many benefits to an employer:

  • Lower health insurance premiums – high deductible health plan premiums are typically lower than traditional plans.
  • Tax savings for the company – contributions to your employee HSAs are excluded from the company’s gross income and not subject to withholding from income tax or other employment taxes.
  • Health insurance carrier neutral – if your company chooses a different health insurer, your employees can keep their accounts and avoid the cost and hassle of transferring them.
  • More choice for employees – money saved in premiums can be used to fund their HSAs, so they decide how health care dollars are spent.
  • Savings for the future – Employees can use HSAs to save for future health care expenses by investing and growing those funds.

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Explore the Differences

Health Savings Account (HSA)
Flexible Spending Account (FSA)
Who is eligible?
With a H S A Employees enrolled in a high deductible health plan (HDHP) who do not have any other non-HDHP health plan, including coverage under Medicare, a spouse’s health plan or FSA.
With a F S A Employees enrolled in a traditional health plan
Who owns the account?
With a H S A Employee owns the account.
With a F S A Employer owns the account
What happens at the end of the year?
With a H S A Unused balance rolls over from year to year
With a F S A Depending on your employer, you may be allowed to carry over up to $500 at the end of the year or allowed to submit claims during the first 2 ½ months of the next plan year.
What happens if I leave my job?
With a H S A It’s your account. You keep it.
With a F S A You may submit expenses for reimbursement until the claims filing deadline. Expenses must have been incurred during the time period you were covered (the time your coverage began through the end of the month in which you terminated – unless you choose to continue the health care FSA through COBRA).
What are the annual contribution limits?
With a H S A Employee Only: $4,150
Family: $8,300
With a F S A $3,050 per employee
What expenses are qualified for reimbursement?
With a H S A Qualified health expenses as defined by IRS Code Section 213(d). Refer to IRS Publication 502 for more information.
With a F S A Health Care FSA: Qualified health expenses as defined by IRS Code Section 213(d). Refer to IRS Publication 502 for more information. Limited-Scope Health Care FSA: Only qualified dental and vision expenses are reimbursable.
When can I access my funds?
With a H S A Only funds paid in can be accessed.
With a F S A Money can be accessed before it is paid in.
How do I get reimbursed?
With a H S A If you have HSA funds, use your debit card at the time of service. If you don’t have HSA funds, pay for the expenses out of pocket and reimburse yourself when you have HSA funds.
With a F S A Submit a claim form and provide documentation to receive reimbursement.
What documentation do I need?
With a H S A Keep all itemized receipts in case of an IRS audit.
With a F S A Documentation must contain the following information for payment to be issued:
  • Provider of services
  • Person receiving care
  • Date of services
  • Charge for the services
  • General description of the services provided
Are non-qualified health care withdrawals allowed
With a H S A Review IRS Publication 969 and talk with your tax advisor for more information.
With a F S A Not allowed
Does the account earn interest?
With a H S A Yes the account earns interest
With a F S A No the account does not earn interest
What are the tax benefits?
With a H S A Contributions are tax-deductible. Interest is tax-deferred. Withdrawals for qualified health care expenses are tax-free.
With a F S A Contributions are tax-deductible. Withdrawals for qualified health care expenses are tax-free.
Is enrollment in a qualified high deductible health plan required?
With a H S A To make contributions, you must be enrolled in a qualified high deductible health plan.
With a F S A No. If you are enrolled in a qualified high deductible health plan and health savings account, then you should only participate in a limited-scope health care FSA.
Can funds be used for retiree health insurance premiums?
With a H S A Only for:
  • Post-65 health insurance, including Medicare (other than premiums for a Medicare Supplement policy such as Medigap)
  • COBRA
  • Qualified long-term care insurance
  • Health insurance, if receiving unemployment
With a F S A No funds cannot be used for retiree health insurance premiums
 
*In some cases, this service may consist of deposit and non-deposit products that may or may not be FDIC insured. Non-insured FDIC products are not considered a deposit of, obligation of, nor guaranteed by the bank, and are subject to investment risk including the possible loss of principal invested.