Help Center

Empowering you to make better informed decisions about employee benefits

2023 HSA Limits

The 2023 HSA contribution Limits are $3,850 for individuals and $7,750 for families. The minimum deductibles are now $1,500 for individuals and $3,000 for families.

Group of young adult hikers with backpacks on their shoulders walking on the rocks in the countryside in summer weather. Concept of active recreation.

Important Definitions

Your personal glossary of employee benefits terms

Representative from Smarter Benefits Solutions working with a client

The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 requires employers who employed at least 20 employees on more than 50 percent of its typical business days in the previous calendar year to offer their employees the opportunity to continue their group healthcare, dental and vision coverage under the employer’s plan, if the coverage would end due to employee termination, layoff, or certain other employment status changes, called “qualifying events.” The continuation of coverage applies to surviving spouses, ex-spouses, and dependents of employees as well.


Employers must comply with many regulations related to their employee benefits: ERISA notifications and Wrap Documents, COBRA, ACA Reporting, PCORI Fees, Cadillac Taxes, Nondiscrimination Testing for Fully Insured Health Plans, Form 5500 Filings when over 100 employees, etc. It’s important to know what reporting is required and when.

Flexible Spending Accounts

Most employees can participate in Flexible Benefit Plans. Exceptions include partners in a business, members of LLCs, and shareholders who own 2% or more in S-corporations.

Domestic partners are eligible to use an employee’s FSA only if the domestic partner is also a dependent under IRS Code 152. Domestic partners that do not qualify as dependents are not eligible for an employee’s FSA reimbursements.

FSAs cannot discriminate in favor of highly compensated employees. Annual nondiscrimination testing is required with FSAs to ensure that the employer meets participant eligibility requirements.

Health Reimbursement Arrangements (HRAs)

HRAs are a great option for both employers and employees because of their tax advantages. Employer reimbursements for qualified healthcare expenses are tax-deductible for the employer and tax-exempt for employees in the HRA. Employers can choose how much to reimburse, in what amounts and in what order. They can decide if they or the employee will pay first dollar expenses and HRAs can be paired with HSAs in certain circumstances. It’s a creative way to “buy down” high deductibles.

Employers can decide to fund monthly, quarterly or annually and in which plan year. Regardless of the employer rules, employees enjoy the benefits of reduced out-of-pocket expenses.

With few exceptions, almost all employees can participate in an HRA. Exceptions include partners in a business, members of LLCs, and shareholders who own 2% or more in S-corporations. Employers can cover their employees only or employees and their dependents, as well as domestic partners as long as they meet the IRS Section 152 definitions. Employers can also choose to provide HRAs to retirees and former employees.

HRAs cannot discriminate in favor of highly compensated employees. Annual nondiscrimination testing is required with an HRA; to insure the employer meets participant eligibility requirements. We can help you remain in compliance.

Health Savings Accounts (HSAs)

HSAs are like “medical” IRAs. They are TRIPLE tax-advantaged accounts that individuals with HSA–compatible, high deductible health plans (HDHPs) can fund and use to pay for medical expenses. Funds deposited into an HSA may be pre-tax, can accumulate over time without tax implications and can be spent tax-free on qualified expenses. HSAs can also be used to accumulate savings over time; like an IRA.

To be eligible for an HSA, the accountholder must be covered only by an HSA-compatible, high deductible health plan and must not be a dependent on another person’s tax return. Individuals age 65 and older are eligible to open an HSA when they have not elected Medicare Parts A, B, C or D. An HSA accountholder cannot have access to a general-purpose healthcare FSA or HRA through their employer or their spouse’s employer, unless the plans are “stacked.”

A high-deductible health insurance plan is one with an annual deductible of at least $1,500 for individuals and $3,000 for families.

Premium Only Plans (POPs)

Employees can often realize 30 – 40% in tax savings because contributions to a POP are exempt from payroll taxes. The actual tax savings are on city, state, and federal income taxes, including Social Security and Medicare taxes on all money employees use to pay for their portion of insurance premiums. Under a Section 125 POP, employees’ take-home pay is increased which helps reduce the high cost of providing health coverage for family members. Employers also realize savings by offering a POP to employees. Typically, employers save approximately 10% in tax savings as a result of lower Social Security, Medicare, Federal and state unemployment and, in some cases, worker’s compensation taxes, depending on the state. Employees of regular corporations, S corporations, limited liability companies (LLCs), partnerships, sole proprietors, professional corporations, and not-for-profits can all reduce payroll taxes by establishing a Section 125 POP. While the Code prohibits a sole proprietor, partner, members of an LLC (in most cases), or individuals owning more than 2% of an S corporation from participating in the Section 125 POP, owners may still benefit from the savings on payroll taxes by sponsoring the plan for their employees.

Employers have certain responsibilities under Internal Revenue Code Section 125 and failure can result in financial penalties to the employer.

Professional Employment Organizations (PEOs)

Professional employer organizations (PEOs) partner with small businesses to provide payroll, benefits, and HR support. They operate under a co-employment model where the business owner still has control of his or her employees, but the employees legally appear on the PEO’s books for tax and compliance purposes.

ESAC Accreditation and CPEO Certification

The Employer Services Assurance Corporation (ESAC) is an independent nonprofit corporation that is the official accreditation and financial assurance organization for the PEO industry. Earning accreditation demonstrates a PEO’s financial stability, ethical business conduct and adherence to operational standards and regulatory requirements.

ESAC establishes standards for ethical conduct, professional competency, and financial and operational reliability. They use independent verification of standards compliance, provide financial assurance and notification programs to assure clients, employees, insurers, and government authorities that they are meeting their contractual and fiduciary responsibilities, complying with state and federal laws and regulations.

Demonstrating your chosen PEO’s Reliability

Because of the widespread promotion of IRS certification by CPEOs and the media, more employers are requiring verification of reliability. IRS certification is focused on federal employment taxes, but other employer liabilities such as employee wages, state and local employment taxes, health and workers’ compensation insurance, and retirement plan contributions are equally important. ESAC provides time-tested verification and financial assurance of all key areas of PEO reliability for both IRS certified and non-certified entities. And only accreditation ensures that all PEO entities under common ownership are financially reliable–a proven reliability advantage for accredited PEO clients.

How to Find the Right PEO
  1. Assess your workplace to determine your human resources and risk management needs.
  2. Make sure the PEO is capable of meeting your goals. Meet the people who will be serving you.
  3. Ask for client and professional references.
  4. Does the PEO have a demonstrated history of adherence to the industry’s professional performance practices, including responsible financial management of its business? Check to determine if the PEO’s financial statements are independently audited by a CPA, whether their risk management practices have been independently certified by the Certification Institute, or if their operational, financial, and ethical practices have been independently accredited by ESAC.
  5. Is your prospective PEO a member of NAPEO, the national trade association of the PEO industry?
  6. Investigate the company’s administrative and management expertise and competence. What experience and depth do their internal staff have? Does the PEO corporate staffing allocation follow the priorities of the PEO’s marketed services? Does their senior staff have professional training or designations?
  7. Understand how the employee benefits are funded. Is the PEO fully insured or partially self-funded? Who is the third-party administrator (TPA) or carrier? Is their TPA or carrier authorized to do business in your state?
  8. Understand how the employee benefits are tailored. Determine if they fit the needs of your employees. Will they allow you to carve out your benefits if necessary?
  9. Review the service agreement carefully. Are the respective parties’ responsibilities and liabilities clearly laid out? What guarantees are provided? What provisions permit you or the PEO to cancel the terms of the contract?
  10. Make sure that the company you are considering meets all state requirements.

Ask Us About Our Affordable Options

For for medical, dental, vision, life, disability and supplemental benefits