Flexible Spending Accounts 2020-09-09T10:45:05+00:00

Flexible Spending Accounts
Pre-Tax Benefits for Your Employees Healthcare Expenses

What is a Flexible Spending Account?

A flexible spending account (FSA) allows employees to put aside pre-tax money to use to reimburse themselves for eligible healthcare expenses. Not only can they use their FSA accounts to pay for themselves, but they can use it toward the healthcare expenses of their eligible dependents. Employers can determine the maximum amount an employee may contribute to their FSA during a benefit plan year.

Flexible Spending Accounts Allow Employees To:

  • In 2018, the FSA employer contribution rules set the contribution cap to $2,650, a $50 increase from the previous year. This cap signifies that throughout the year employees are limited to depositing under $2,650 into their FSA accounts.

  • In 2019, however, the limit is set to increase by another $50, bringing the 2019 cap to $2,700.

  • Use funds to pay for eligible medical expenses for you, your spouse, and your dependents.

  • Easily access funds when you need them the most with a personal debit card linked to the FSA account.

How Does a Flexible Spending Account Work?

Throughout the course of the benefit plan year, equal portions of an employee’s annual election amount will be deducted, pre-tax, from each paycheck to fund the account, until the annual election amount is reached. Even though employees’ accounts are funded through payroll deductions, all FSAs are pre-funded by the employer, which allows employees to use the full amount of their election at any point during the plan year. The full amount of each employee’s annual election will be deducted pre-tax, thus lowering an employee’s taxable income and maximizing tax savings.

Benefits of Offering a Flexible Spending Account:

  • FSAs can help employees save an average of 30% in federal, state, and local taxes on out-of-pocket premiums.

  • Employers are helping their employees pay for their healthcare expenses easier, without feeling strain from added costs.

  • Employees are saving money on expenses that they’re already paying for, like doctors’ visits, prescription drugs, and much more.

What Does a Flexible Spending Account Cover?

Eligible expenses that can be reimburses are determined by IRS rules and your employer’s specific plan. Eligible expenses are typically those that you pay for out of pocket and include items and services are meant to diagnose, cure, treat, and/or prevent illness or disease.

Benefits of Offering a Flexible Spending Account:

  • The cost of doctor’s office visits – primary care, dental, vision, etc.

  • The cost of prescription drugs, dental cleanings, eyeglasses, etc.

  • Over-the-counter items such as bandages, diabetic supplies, thermometers, batteries for healthcare tools, and more.

Ready to Offer Flexible Spending to Your Organization?

Setting up an FSA for your staff is simple with Unicorn HRO. Our iCON platform offers automation and simplicity for you and your organization to access necessary information related to HR and benefits administration.

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