Employee Benefits with the Human Touch
Flexible Spending Account
A Flexible Spending Account (FSA) is an employee benefit that enables participants to set aside pre-tax dollars from each paycheck to pay for eligible medical and/or dependent care costs.
A Smart Benefit for Your Employees
Offering a Flexible Spending Account (FSA) as part of your employee benefits package is a powerful way to provide tax-advantageous healthcare and dependent care solutions.
FSAs not only help employees manage their out-of-pocket expenses but also offer tax savings for both the employee and your business.
Here’s everything you need to know about sponsoring an FSA plan for your workforce.
What is a Flexible Spending Account (FSA)?
An FSA is a tax-advantaged account offered by employers that allows employees to set aside a portion of their earnings, tax-free, to pay for eligible healthcare and dependent care expenses. By offering an FSA, you can provide your employees with a flexible, cost-effective way to manage their personal healthcare costs while lowering your overall payroll tax burden.
Key Features:
- Pre-tax contributions: Contributions are deducted from employees’ paychecks before taxes, reducing their taxable income and saving them money.
- Employer-sponsored: FSAs are employer-driven benefits, allowing you to offer valuable financial assistance to your workforce.
- Use it or lose it: While FSAs are designed to be used within a plan year, employers can offer a grace period or limited rollover option to extend the timeframe for employees to use their funds.
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Types of FSAs You Can Offer
Care FSA, or both before the start of each Plan Year.
Health FSA
Covers eligible medical, dental, and vision expenses for the employee, spouse, and dependents.
The participant’s entire yearly Health FSA election is available to use on the first day of the Plan Year.
Eligible Expenses:
- Medical, dental, and vision copayments
- Prescription medications
- Over-the-counter medications (with a prescription)
- Medical supplies and equipment (e.g., bandages, crutches)
- Therapy and chiropractic care
Dependent Care FSA
Covers dependent care while the employee is at work.
The participant’s Dependent Care FSA funds are available only after being deducted from his or her paycheck.
Eligible Expenses:
- Childcare (daycare, preschool, before/after-school care)
- Summer camps for children
- Care for a disabled spouse or dependent adult
How an FSA Saves
Employers
Employee Eligibility
Participants
Who Can Contribute
Employees who contribute to a Health Savings Account are not eligible to enroll in a Health FSA.
These employees can enroll in a Limited Purpose FSA.
How it Works
For Employers
For Participants
Health FSA
Dependent Care FSA
EMPOWER Can Tailor an FSA
to Meet Your Needs
Employers can customize their plans with many options, including:
Reimbursement Methods
• Check
• Direct Deposit
• Check Register sent to Employer
Carryover
Contribution Limits
Streamline Your Benefits With Ease
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