FAQs
FREQUENTLY ASKED QUESTIONS
General Questions on the Evolution1
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What is an FSA?
Flexible Spending Accounts (FSAs) are tax-advantaged financial accounts that can be set up through employers’ cafeteria plans in the United States. An FSA allows an employee to designate a portion of his or her pre-tax earnings to pay for qualified expenses as established in the cafeteria plan, most commonly for medical expenses but often for dependent care or other expenditures. The employer is also allowed to make contributions to employee FSAs, if desired, in order to offer a greater benefit to the staff. Since the money deducted from an employee's pay for transfer to an FSA is not subject to federal, state, or payroll taxes, employees can save upwards of 40% on eligible expenses, and sometimes more, depending on tax bracket.
Common eligible expenses include dental treatment, orthodontia, prescription drugs, diagnostic services, hospital services and surgery, laboratory fees, obstetrical expenses, chiropractic care, physical therapy, eye examinations, glasses, contact lenses, laser eye surgery, hearing aids, smoking cessation programs, and weight loss programs to treat obesity, to name a few. View all eligible expenses as designated by the IRS here.
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What is an HRA?
Health Reimbursement Accounts (HRAs) are employer-funded plans that reimburse employees for incurred medical expenses that are not covered by the company's standard insurance plan. Because the employer funds the plan, any distributions are considered tax deductible (to the employer). Reimbursement dollars received by the employee are generally tax free. Unused HRA dollars roll over from year to year, providing a potential incentive for employees to be better stewards of healthcare spending. If employment is terminated the employer can choose to keep unused funds. Common eligible expenses include dental treatment, orthodontia, prescription drugs, diagnostic services, hospital services and surgery, laboratory fees, obstetrical expenses, chiropractic care, physical therapy, eye examinations, glasses, contact lenses, laser eye surgery, hearing aids, smoking cessation programs, and weight loss programs to treat obesity, to name a few. View all eligible expenses as designated by the IRS here.
Evolution1 and our Partners serve more than 8 million consumers, making us the nation’s largest electronic payment, on-premise and cloud computing healthcare solution that administers FSAs, HRAs, HSAs, VEBAs, Wellness and Transit Plans.
Our Lighthouse1 and PayDirect solutions are powerful administrative platforms that meet more than 1,200 unique plan designs, simplify the user experience, and completely automate workflow. Our third-party administrator, financial institution, health plan and benefits broker Partners use our platforms to offer flexible, customized solutions to their clients that deliver these valuable benefits to their employees and customers:
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What is an HSA?
Health Savings Accounts (HSAs) are tax-advantaged medical savings accounts available to taxpayers in the United States who are enrolled in a High Deductible Health Plan (HDHP). HSAs are owned by the individual, differentiating the account from the company-owned Health Reimbursement Arrangement (HRA) that is an alternate tax-deductible source of funds paired with HDHPs. And, unlike a Flexible Spending Account (FSA), HSA funds roll over and accumulate year over year if not spent, with the ability to earn tax-free interest on the account. HSA funds may be used to pay for qualified medical expenses at any time without federal tax liability.
Common eligible expenses include dental treatment, orthodontia, prescription drugs, diagnostic services, hospital services and surgery, laboratory fees, obstetrical expenses, chiropractic care, physical therapy, eye examinations, glasses, contact lenses, laser eye surgery, hearing aids, smoking cessation programs, and weight loss programs to treat obesity, to name a few. View all eligible expenses as designated by the IRS here
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What is a VEBA?
A Voluntary Employees' Beneficiary Association (VEBA) is a form of trust fund whose sole purpose must be to provide employee benefits. Among the types of benefits a VEBA may provide are accident insurance benefits, childcare costs, employee continuing education, the cost of legal services, life insurance benefits, severance pay, supplemental unemployment benefits, sick leave pay, training benefits, and vacation pay. A VEBA cannot, however, provide commuter benefits, miscellaneous fringe benefits, or retiree income. The plan may pay benefits to employees, their dependents, or their designated beneficiaries, or to disabled, laid-off, or retired former employees. Employer contributions to a VEBA are tax-deductible. Beneficiaries of a VEBA must have an employment-related common bond (such as a common employer), be covered by a collective bargaining agreement, or belong to a labor union.
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What is a Wellness Plan?
Employee Wellness Plans are designed to support and promote worker health and wellness through education and awareness programs primarily based at the worksite. The program is a win-win in that employees benefit from learning and staying well, and the employer has improved loyalty and lower rates of absenteeism. Wellness programs are also a tax write-off under business expenses and ultimately decrease healthcare costs. If certain conditions are met the employee may even receive up to twenty percent in discounts on premiums. Focus areas within wellness plans often include lunch-and-learn wellness presentations, health risk assessments, smoking cessation, stress management, work/life balance, employee assistance (EAP) programs, and time management.
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What is a Transit Plan?
Transit Plans allow employers to offer employees the opportunity to set aside a portion of their salary to pay for certain transportation expenses. The employee is not taxed on amounts set aside and used for qualified expenses, which often consist of commuting and parking expenditures.
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