Flexible Spending Accounts (FSAs)
Flexible spending accounts are funded by your employee with pre-tax dollars up to $2,750 annually. Funds are used to pay for certain medical and dental expenses for your employee, their spouse, and their dependents. Some qualified expenses include:
- Health insurance deductibles and co-payments (but not premiums)
- Prescription medications
- Over-the-counter medicines with a doctor’s prescription (reimbursements for insulin are allowed without a prescription)
- Medical equipment and supplies like crutches, bandages, and diagnostic devices like blood sugar test kits
Employees generally must use FSA funds within the plan year. However, employers can provide a grace period of up to 2 1/2 months to use money in a flexible spending account or allow a carryover of up to $500 into the following plan year.
Employers can – but aren’t required to – make contributions to their employee’s FSA.
Since money is taken out on a pre-tax basis, your employee’s taxable income is reduced meaning both you (as the employer) and your employee may be able to lower your tax responsibility.
An FSA can help your employees save anywhere from 30 to 40 percent on their out-of-pocket expenses.
Health Benefit Options Comparison Chart
This chart will help you compare the various plans and select one that will best meet the needs of your employee.
|Employer tax savings|
|Employee tax savings|
|Covers out-of-pocket expenses|
|Covers insurance premiums|
|Used to purchase health insurance|
|Contribution limits||$2,750||No limit||$3,550 single
|No limit||No limit|
|Pairings||N/A||Group plan||High-deductible plan||Individual plans||N/A||Group plan|
|Coverage restrictions||None||Must cover at least two employees||None||None||None||None|
Household Employee Benefits & Insurance
- Health Insurance
- Dental & Vision Benefits
- Virtual Medicine
- Small Employer HRAs (QSEHRA)
- Individual Coverage HRAs (ICHRA)
- Health Reimbursement Arrangements (HRA)
- Flexible Spending Accounts (FSA)
- Retirement Plan
- Workers' Compensation Insurance
- Travel Insurance
- Employee Dishonesty Insurance
- Additional Insurance Options
Talk to an Expert
Our employee benefits experts are available to discuss your needs and help you get started with a Health Reimbursement Arrangement or other benefits.