These accounts
, introduced by the IRS back in the mid '80's, are a terrific benefit tool to help contain out of pocket medical and dependent care expenses. The advantage of utilizing this benefit over deducting these expenses on a personal tax return is that in most states, you save on five (5) different taxes. You reduce your Federal Income, State Income, Local Income, Social Security and Medicare taxes. As great as these two programs are for an employee and employer, it has a disturbing "catch" that invariably encourages smaller employers to limit or eliminate the amount of $$ that may be put aside each year. The problem provision allows whatever level an employee enrolls in to have access to the full amount on 1/1 of the calendar year. If they use the entire amount on 1/2, that is their prerogative and they may pay the employer back each pay period the rest of the calendar year. If that same employee quits or leaves the company on 1/3, there is no obligation for that employee to repay this money and there is no legal remedy for the employer to recoup this cash outlay from the employee. The only recourse is to hope other participants either quit with positive balances or they leave a balance under the "use it or lose it" rule at the end of the calendar year. For small employers, this just does not happen. As a result, this benefit was often only available to employees of large companies that could spread the risk. Enter the PEO. Professional Employer Organizations allow many small employers to assemble under one organization for benefits purposes. This allows the inherent risk described earlier to be spread out over a much larger group of participants. Now, when a employee who has maxed out his claim leaves a small 5 man group, the Benefits Administration Team of the PEO takes on the risk of recouping the lost money through the other many small employers participating in the FLEX plan. In addition, this reduction in risk allows the PEO to offer higher annual limits employees may set aside. At Management 2000, we allow individuals to set aside up to $5,000 for medical and/or dependent care expenses in a calendar year. Ultimately, it is the PEO who assumes all the risk for this plan. The employee and employer participants in the PEO get all the benefits of the FLEX plans with none of this risk described above. This is just another example of the Human Resource Administration advantage that a PEO can offer small to medium sized companies.
, introduced by the IRS back in the mid '80's, are a terrific benefit tool to help contain out of pocket medical and dependent care expenses. The advantage of utilizing this benefit over deducting these expenses on a personal tax return is that in most states, you save on five (5) different taxes. You reduce your Federal Income, State Income, Local Income, Social Security and Medicare taxes. As great as these two programs are for an employee and employer, it has a disturbing "catch" that invariably encourages smaller employers to limit or eliminate the amount of $$ that may be put aside each year. The problem provision allows whatever level an employee enrolls in to have access to the full amount on 1/1 of the calendar year. If they use the entire amount on 1/2, that is their prerogative and they may pay the employer back each pay period the rest of the calendar year. If that same employee quits or leaves the company on 1/3, there is no obligation for that employee to repay this money and there is no legal remedy for the employer to recoup this cash outlay from the employee. The only recourse is to hope other participants either quit with positive balances or they leave a balance under the "use it or lose it" rule at the end of the calendar year. For small employers, this just does not happen. As a result, this benefit was often only available to employees of large companies that could spread the risk. Enter the PEO. Professional Employer Organizations allow many small employers to assemble under one organization for benefits purposes. This allows the inherent risk described earlier to be spread out over a much larger group of participants. Now, when a employee who has maxed out his claim leaves a small 5 man group, the Benefits Administration Team of the PEO takes on the risk of recouping the lost money through the other many small employers participating in the FLEX plan. In addition, this reduction in risk allows the PEO to offer higher annual limits employees may set aside. At Management 2000, we allow individuals to set aside up to $5,000 for medical and/or dependent care expenses in a calendar year. Ultimately, it is the PEO who assumes all the risk for this plan. The employee and employer participants in the PEO get all the benefits of the FLEX plans with none of this risk described above. This is just another example of the Human Resource Administration advantage that a PEO can offer small to medium sized companies. 
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