Premium Reimbursement Account

An account established for a Participant pursuant to this Plan to which part of his Cafeteria Plan Benefit Dollars may be allocated and from which Premiums of the Participant shall be paid or reimbursed. If more than
one type of insured or self-funded Benefit is elected, sub-accounts shall be established for each type of insured or self-funded Benefit.

Create Opportunity, Not More Paperwork
FEBCO  can help you set up a special Section 125 plan and Premium Reimbursement Account (PRA). These plans work together simply and easily to enable your part-time employees to pay for their health coverage on a
pre-tax basis without creating additional administrative hassles for your organization.

This will not only help you avoid the potential employer penalties that are part of health care reform, but it
will also allow both you and your employees to save on taxes as your employees direct some of
their paycheck to buy health care on a pre-tax basis.

What is a Premium Reimbursement Account?
A Premium Reimbursement Account (PRA) is similar to a dependent care Flexible Spending Account (FSA).
Simply put, it's an account that allows those employees who are not eligible for employer-sponsored health coverage to set aside some of their paycheck on a pre-tax basis to pay for health care premiums.

The Benefits of a Premium Reimbursement Account 
*     Simplified administration. Employees submit claim forms for reimbursement directly to Benefit Concepts,
       taking the employer out of the middle of the transaction.
*     Reduces employer's taxes. Employees' incomes are reduced by the pretax contributions, cutting
       employer's FICA and federal taxes (see example below)
*     Compliance with health care reform. Setting up a Section 125 plan with a PRA meets employer
       requirements and protects employers.
*     Increases employees' purchasing power. Because employees don't pay taxes on their contributions, the
       cost of health insurance they purchase on their own is effectively lowered.

How it Works
FEBCO  will work with you to set up your account, employee salary reduction agreement, and arrangements to transfer the funds your employees have set aside from their paychecks.

Once your employees have enrolled in health coverage, they'll file reimbursement requests with FEBCO for premiums paid from the account. Validating reimbursement requests, administering payments to employees, and responding to PRA questions will be managed directly by FEBCO, freeing you from the administrative tasks. You will only pay the small monthly maintenance and per-employee fees directly to FEBCO. These are typically offset by your tax savings (see example below).

FEBCO will provide an online tutorial to help you set up and administer your PRA.