What you may not know about your FSA
By Jody Dietel
With fall just around the corner, benefits managers are gearing up to educate employees about flexible spending accounts for the open enrollment period. While benefits professionals may have a good handle on the tax-advantaged benefits accounts that can save participants up to 40 percent on health care, dependent care and commuting expenses, there’s still plenty about FSAs that benefit pros may not know.
Now is the perfect time for HR managers to keep details of FSAs top of mind and help employees understand the fine print so they recognize why enrolling this fall is the smart financial decision.
Eligible expenses for FSA users number in the thousands. You may be surprised at the breadth of products and services that are covered by FSAs. Participants can save big on a wide range of expenses: from dental and vision care with a health care FSA; and nannies and after-school care with a dependent care FSA. While we’re at it, don’t forget to elect your monthly commuter benefits: mass transit commuting expenses and parking for work. To explore a list of items that participants can purchase using an FSA, check outwww.savesmartspendhealthy.com.
Some eligible expenses may surprise you. While the most common covered expenses include co-pays, prescription drugs and dental and vision care, there are plenty of expenses often eligible for reimbursement that may come as a surprise. They include acupuncture treatments; doctor-ordered weight loss programs; the additional costs of gluten free food items for those with diagnosed gluten sensitivity issues; mileage to/from medical appointments and smoking cessation programs.
FSA participants need to re-enroll each year. While many other benefits like health insurance do not require employees to sign up year after year, FSAs usually don’t include automatic reenrollment. Employees should look for FSA enrollment forms each year when they get their benefits package.
Contributions can occasionally be changed mid-year or opened after open enrollment. FSA contributions are not always set in stone. A life changing event, such as a birth or death in the family, can sometimes allow participants to change the amount they decided set aside during open enrollment later in the year or start an account altogether.
The entire FSA contribution is available from day one. Unlike money from an employees’ annual salary which trickles in via paychecks every two weeks, FSA participants have access to the money they elect to contribute from day one. For families who face costly surprises early in the plan year, having the money available right off the bat can be a lifesaver.
FSAs contribute to an employers’ bottom line too. Just like participants, employers don’t have to pay payroll taxes on any of the money employees contribute directly to their FSA as opposed to receiving it in a paycheck.
FSAs are a great vehicle for employees to save hard-earned dollars. As we head into open enrollment, benefits managers helping everyone brush up on FSA details is an important step.