Flexible Spending Account (FSA)

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Flexible Spending Account (FSA)

Flexible spending accounts (FSAs) are another type of employee benefit, in this case, solely designed to save employees money through pre-tax savings on eligible healthcare expenses. Setting up an account is another employee perk that will keep existing staff in the company's favor and help attract top talent later.

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What is a Flexible Spending Account (FSA)?

A flexible spending account (FSA) is a type of savings account that provides the account holder with specific tax advantages. An FSA, sometimes called a "flexible spending arrangement," can be set up by an employer for employees. The account allows you to contribute a portion of your regular earnings; employers also can contribute to employees' accounts. Distributions from the account must be used to reimburse the employee for qualified expenses related to medical and dental services.

Another type of FSA is a dependent-care flexible spending account. It is used to pay for childcare expenses for children age 12 and under and can also be used to care for qualifying adults, including a spouse, who cannot care for themselves and meet specific Internal Revenue Service (IRS) guidelines. A dependent-care FSA has different maximum contribution rules than a medical-related flexible spending account.

What expenses are eligible for Flexible Spending Account reimbursements?

Any expense considered a deductible medical expense by the Internal Revenue Service and not reimbursed through your insurance can be reimbursed through the Flexible Spending Account. Examples include:

Fees paid to doctors, dentists, surgeons, chiropractors, psychiatrists, psychologists, and Christian Science practitioners
Contact lenses and eyeglasses
Fees for hospital services, qualified long-term care services, accident and health, and qualified long-term care insurance premiums, nursing services, laboratory fees, prescription medicines, drugs, and insulin.
Acupuncture treatments
In-patient treatment at a center for alcohol or drug addiction
Smoking-cessation programs and prescribed drugs to help nicotine withdrawal
False teeth, hearing aids, crutches, wheelchairs, and guide dogs for the blind or deaf (And more. Read over your FSA benefit documentation to make sure you know what is and isn't covered. Keep receipts for everything you spend that you plan to seek reimbursement for later.)

All the money set aside in an FSA generally must be used by the plan year's end. However, a plan can offer a grace period of up to two-and-a-half months to finish using that funding.

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Recruitment & Retention

Employees control on benefits

Eliminating guesswork

Recruitment & Retention

Risk Factors

Small businesses need to offer comprehensive benefits packages if they want to stay competitive with other employers within their industry.

Solution

Employees place high importance on benefits, and for some, benefits packages can be the deciding factor between two jobs. To attract and retain top talent, you should expect to compensate them accordingly. In a recent study by MetLife, 72% of employees said having customized benefits increases their loyalty to their employer.

Employees control on benefits

Risk Factors

Every employee is unique, and benefits should reflect that. For example, an unhealthy older employee with a large family will want different advantages than a young, healthy, single employee laden with student debt.

Solution

Flexible benefit plans allow your employees to choose only those benefits that are relevant to them. Flexible benefits empower employees to ensure their organization meets their professional and personal needs. Employees want to feel their employer is investing in them, and flexible plans are a great way to do that.

Eliminating guesswork

Risk Factors

When you create a plan, you have to note everyone’s needs and then make a suitable plan. Hence, there might be some coverages that other employees need but are omitted.

Solution

Your employees know what type of benefits will best suit them. When you offer a flexible benefits plan, you don’t have to try to create a plan that appeases everyone. Instead, you can leave the choices to your employees and rest assured that they are getting the right benefits to accommodate their health, budgets, and personal and professional happiness.

Theft Coverage

Risk Factors

You return from a family vacation to discover thieves have stolen electronic equipment from your media room.

Solution

If your possessions are stolen, damaged or destroyed in an insured loss, your coverage can help replace them, up to the policy’s stated limits.

Personal Possessions Coverage

Risk Factors

You mastered the basics of surfing during lessons in Hawaii but your wedding ring is stolen.

Solution

With personal possessions coverage, lost jewelry is covered up to your policy limits.

When the year ends or the grace period expires, any funds that remain in the FSA are lost. Thus, your employees should carefully calibrate the amount of money they plan to put into the FSA account and how they intend to spend it over the course of the year.

Setting up an account is another employee perk that will keep existing staff in the company's favor and help attract top talent later. Although these employer benefit plans can sometimes be confusing, we can help plan this better for you and your organization. Connect with us to know more!

Flexible Spending Account (FSA)

Flexible Spending Account (FSA)

What is a Flexible Spending Account (FSA)?

What expenses are eligible for Flexible Spending Account reimbursements?

Click And Learn

Recruitment & Retention

Risk Factors

Solution

Employees control on benefits

Risk Factors

Solution

Eliminating guesswork

Risk Factors

Solution

Theft Coverage

Risk Factors

Solution

Personal Possessions Coverage

Risk Factors

Solution

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