Flexible Spending Accounts

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.

Looking for some other employee benefit ideas? Check out these options or download our Employee Benefits Overview (PDF).

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.

  FSA HRA HSA QSEHRA ICHRA POP
Employer funded    
Employer tax savings
Employee funded      
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
$7,100 family
$5,250 single
$10,600 family
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

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.

Call Us
(800) 929-9213
Mon – Fri 8:30 am – 8 pm ET

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