Whether funded by the employer or employee, contributions are pre-tax, thereby reducing payroll tax expenses for the company and personal taxes for the employee. A maximum annual contribution of $2,850 is allowed and funds are available for employee use on Day 1. FSAs allow for a rollover amount ($570 in 2022) or a two-and-a-half month grace period, providing employees with greater flexibility and more time to use their funds. Unused (non-rollover) funds belong to the employer at the end of the plan year. Employees must be W2 and offered major medical.
FSAs are very family-friendly, allowing your employees to cover expenses for themselves, their spouse and taxable dependent. They include Medical Spending Accounts and Dependent Day-Care spending Accounts. Employees enjoy reimbursement of a significant number of out-of-pocket expenses not covered by their primary health plan, including deductions and co-pays, prescription and OTC drugs, dental and vision, mental health, and infertility. Prescription discounts also are available.
- Employer- and/or employee-funded
- Pre-tax contributions
- Wide variety of reimbursements*
- Prescription discounts
- Employer retention of unused funds
- Customized cards and portal
- Mobile app and digital wallet
*As defined by the IRS section 213D