Helps employees avoid financial issues when seeking healthcare.
While typical healthcare insurance can be very effective for many of your business’ employees, out-of-pocket medical expenses, such as deductibles and co-payments or dental charges, can still present serious financial challenges. In turn, that increases the risk of employees not seeking necessary treatment. This could lead to the potential worsening of health problems, which could leave some employees unable to work.
Money is put aside for the costs of healthcare only.
A flexible spending account (otherwise known as an FSA) is a way for employees (and employers if they chose) to put money aside specifically to pay for these out-of-pocket medical expenses. This isn’t a typical investment, as the money doesn’t grow, but it is an effective way of managing money for a specific purpose.
Flexible spending accounts are not taxable, reducing payroll taxes.
The other big advantage is that money put into the flexible spending account (FSA) isn’t taxable. This results in a reduction in the payroll taxes paid both by the employing business and the employees.
When are contributions made available to employees?
It’s important to note that any contribution from the employer is payable as a lump sum at the start of the year, and will be available to the employees even if the employee leaves the job. The employee pays their contributions to the flexible spending account (FSA) over the year in regular installments.
Do you think a flexible spending account (FSA) might help your employees cover out-of-pocket medical expenses? If so, contact our employee benefits team to get started.