Employers can spend less on healthcare premiums, while providing the same level of benefit to their employees, but are able to keep their current healthcare provider, if they choose.
Because the medical reimbursement contributions are pre-tax for the employees, tax savings also inure to the employer, since they will no longer be paying matching FICA taxes on the reimbursement fund contributions for each employee. This can amount to hundreds of dollars savings for each employee per year. This is not a wellness plan. A Third Party Administrator (TPA) writes the plan to include all of the proper tax codes, and guarantees any audits for the employer. A Section 125 Cafeteria Plan is provided for the company, free of charge. The TPA directs your payroll people how to set up the payroll to accommodate the deductions and provides all the appropriate numbers for accounting at the end of the year. They manage the reimbursement accounts and process all employee claims, making everything close to turn key for the employer.