Six reasons to offer employee flexible spending accounts
August 08, 2019
Flexible spending accounts offer unique advantages for both employees and employers.
As you complete your Employer Agreement and select the benefits you will offer employees in 2020, consider flexible spending accounts (FSAs). The Board of Pensions offers two types of FSAs:
Healthcare FSAs let employees set aside money from each pay before taxes are taken out, and then use that money to pay for eligible medical expenses, including their annual deductible, copays, and more.
Dependent care FSAs can be used by employees to pay for qualified child care and elder care expenses.
Here are six reasons to offer FSAs:
Employees who contribute to an FSA can save on taxes, while paying for expenses they would have anyway, such as contact lens solution, prenatal vitamins, and orthodontia; or licensed day care, in-home child care, and after-school programs.
Employers save on taxes, too. Because FSAs are funded through pretax payroll deductions, employers who offer them do not pay Social Security and Medicare (FICA) taxes on employees' contributions to these accounts (except for ministers' contributions).
These FICA tax savings can offset some of the administrative costs of offering FSAs. Employers pay just $3.90 per employee per month for each employee who establishes a healthcare and/or dependent care FSA. Only one fee is charged per employee, even if the employee has both types of FSAs. And, there are no setup or annual fees.
Employers can also save on other wage-based expenses, such as unemployment insurance and workers’ compensation.
As an employer, you’ll work with Further, a national leader in health savings and spending account administration, to set up and administer these accounts.
Employees have access to tools and resources through the
Further/Board of Pensions Learning Site to help them get the most from their FSA. And, those who contribute to a healthcare FSA automatically receive a Visa debit card for convenient access to their account funds.
Learn more about these tax-advantaged accounts and how they work. If you have questions about FSAs or selecting benefits for your employees, call the Board of Pensions at 800-773-7752 (800-PRESPLAN).