American Administration Services Company
Nowadays employers must control the cost of doing business but you also need good employees and attracting & retaining employees is one of your most important challenges today. Competitive benefit packages are necessary but you are concerned about excessive costs. According to the U.S. Chamber of Commerce, over one third of payroll goes towards employee benefit & Health Care costs and costs are still rising at an alarming rate (for both fully-insured plans and self-insured plans). Huge increases are predicted for prescription drugs perhaps >20 percent.
The solution is here! Flexdollars - PLURAL NOUN: Money provided by an employer to be used by an employee to obtain various benefits, such as health insurance and life insurance. Also called flexcash. The American Heritage® Dictionary of the English Language: Fourth Edition.2000.
Many large employers have already discovered the value of Hybrid full-flex plans. Traditional Cafeteria plans can be established by organizations with or without employer contributions called spending credits. We enable you to do as other large employers have done for years: convert the dollars you already spend and save taxes. We improve employee benefits AND empower you by installing a step-up from traditional, unexceptional Cafeteria plans. The American Administration FlexCash Plan uses your pre-existing employer dollars more efficiently, shrinks claim liability and reduces wasteful duplicate coverage expense. We convert dollars that previously funded benefits into FlexCash credits that your employees can then use to allocate across multiple menu options. Instead of contributing credits to specific benefits, FlexCash is added back to the income of employees. Contributions are now made entirely by employees so you may now use highly varied credit formulas & since the FlexCash is an addition to salary and not a direct contribution to a benefit plan it may also favorably influence ERISA nondiscrimination. Each ERISA plan is tested but it is funded ONLY with employee contributions so the credits may indirectly escape some ERISA complications.
Our plan is fully compliant with IRS & DOL regulations and is backed by one of the nations most respected law firms specializing in the practice of employee benefits legal work. Our FlexCash plan un-bundles the true cost of insurance coverage and empowers the employer. Eventually employees have a greater incentive to elect more cost-efficient health care options or to opt-out with our FlexCash plan design. The employee becomes a more cost-aware consumer.
We run an analysis and determine exactly how much you are currently spending on employee benefits per employee, per year. Then we convert this cost to a credit based system of FlexCash and give the credit to each eligible employee to spend on various benefit options available in the American Administration FlexCash Plan menu.
Employees must first allocate the employer credit toward the cost of any required core menu options (on a modal, per-pay basis). Employees can elect to add their own dollars through payroll deductions. Each benefit item is placed in one of three categories on the menu:
Employer credits are added to each employee’s paycheck as taxable income. However, if the employee defers the entire credit into Section 125 pre-tax benefits, they will not pay federal, state, or FICA taxes and the employer saves the matching FICA and in many situations FUTA, and SUTA taxes (except on dependent care). The employee can also save federal and state taxes on deferrals to a 401k plan. Employers pay FICA, FUTA, and SUTA taxes and the employee pays FICA taxes on any amount contributed to a 401k plan. Employer and employee taxes are payable on contributions to post-tax benefits. Any credits not allocated by the employee are forfeited, saving the employer the additional costs that probably would have been spent in a traditional benefit plan.
A major advantage of the American Administration Hybrid FlexCash approach is cost control.