Flexible Spending Accounts Made Simple
Many employers want to offer Healthcare Flexible Spending Accounts (Healthcare FSAs) to their employees, but are intimidated by the complicated administration and upfront funding requirements. There is also a risk when an employee leaves that you may not recoup that loss. Along with upfront funding, the Internal Revenue Code (IRC) requires Healthcare FSA purchases follow eligible expense guidelines.
While you can administer your own Healthcare FSA, the requirements can be complicated, costing you time and money.
American Fidelity offers a solution for administering Healthcare FSAs, which includes:
- Upfront funding
- Risk insurance
- Employee education
- Compliance assistance
American Fidelity assists with upfront funding, required by the IRC for your employees' Healthcare FSAs. When we assist with upfront reimbursements, you gain a cash-flow advantage.
Mitigating Your Risk
Your organization could be at financial risk if employees leave before the plan year ends. To mitigate this risk, we offer optional protection to cover the risk associated with required upfront reimbursement.
Dependent Care Accounts
Another option to reduce your overall employment tax while also helping your employees reduce their taxable income is to offer a Dependent Care Account (DCA). This account allows employees to set aside money on a pre-tax basis to pay for eligible dependent care expenses. The DCA reimburses expenses associated with dependent care for either a dependent child under the age of 13 or an adult dependent incapable of self-care.
Limited Purpose FSAs
For employers offering a Health Savings Account (HSA) with a qualified High Deductible Health Plan, a Limited Purpose FSA is another type of reimbursement account that provides employer tax savings. A Limited Purpose FSA reimburses eligible dental and vision expenses, while an HSA reimburses a variety of common healthcare expenses.
Employees want quick and easy access to their contributions, and you want to ensure your plan is compliant. We help with offering several methods to request reimbursements and providing documentation to show eligible expenses.
Participants can pay for eligible expenses via a debit card directly from their account.
Participants can manage their account via a smartphone and upload documentation to prove expenses are eligible.
Participants can also set up an online account and upload documentation to prove expenses are eligible.
How Employee Education Can Help
You may believe that low Healthcare FSA participation is due to employees not having the funds to set aside for medical expenses. However, through our decades of experience, we found that’s not always the case. The fact is, employees may not be participating because they don’t understand how the account works. By not maximizing participation, employers are missing out on significant tax savings.
Through customized communications, our account managers teach your employees how reimbursement accounts pair with your benefit offerings. With our strategic approach to education, we help increase participation in reimbursement accounts, saving you and your employees money in tax savings.
For every dollar your employees contribute pre-tax in a Healthcare Flexible Spending Account, you could save 7.65% on employment tax.1