5 Top FSA Questions from Employers
August 16, 2018
More and more, employees are focusing on the benefits they receive at work rather than their paychecks. In fact, by 2020, there are expected to be three million more FSAs in the United States, as employers and employees flock toward consumer-driven healthcare that provides greater control, increased flexibility and lower premiums.
A Flexible Spending Account (FSA) lets your employees save money by setting aside pre-tax dollars which, depending on the type of account, let them pay for eligible medical, dental, vision and dependent care expenses. Complete the form below to download your Ultimate Guide to Benefits, which shows you the savings potential of an FSA and other employee benefits. And keep reading for answers to a handful of common employer-asked questions related to these accounts.
When can my employees enroll?
Your employees have a few options. The most common time is during open enrollment. Employees can also enroll during his or her time of hire and during a status change. Status changes include marriage, birth, death, divorce and employment status. Employees must enroll every year (there isn’t automatic re-enrollment).
What are the perks of offering an FSA?
You’ll see a number of benefits, including:
- Employee retention and recruitment. Healthcare costs are the top financial concern for Americans, so helping your employees reduce those costs will make your workplace even more attractive to current and future employees.
- Tax benefits. You’ll reduce your taxable wages when your employees contribute to their account.
How much can my employees contribute?
The amount employees can contribute is determined by the IRS each year. The 2018 contribution limit for Medical and Limited FSAs is $2,650. The limit for a Dependent Care FSA is $5,000.
What can I do to help my employees get the most out of their FSA dollars?
Flexible Spending Accounts are governed by the IRS’ use-it-or-lose-it rule, but you have options to reduce the possibility your employees will lose unused funds by the end of the plan year. Those options include offering a:
- Run-out: Extends the final filing date past the last day of the plan year to allow participants additional time to file for reimbursement. Common run-out designs are 30, 60 or 90 days.
- Grace period: Extends the plan year, which allows participants additional time to incur services or purchase eligible products to spend remaining funds. Grace period length can be a maximum of two months and 15 days. A grace period plan design must also pair with a run-out.
- Carryover: Allows up to $500 to be carried over from one plan year to the next. Carryover funds are available five business days after the filing date. A carryover must pair with a run-out.
Can my employees pair their accounts with a Health Savings Account (HSA)?
Your employees can enroll in an HSA if they have a Limited Medical or Dependent Care FSA. However, HSA participants are not eligible to be enrolled in a Medical FSA.
Want to learn more about the savings potential of a Flexible Spending Account? Complete the form above to download our Ultimate Guide to Benefits.