Flexible Spending Account (FSA)
With a Flexible Spending Account (FSA) employees can increase their take-home pay and reduce their taxes. They just set aside money they think they’ll spend for eligible medical expenses throughout the year, and taxes won’t be deducted from that money! In other words, the money they use to pay for these expenses is tax free, which can result in significant tax savings for your employees.
How FSA works
Before the plan year begins, employees estimate eligible medical expenses for the upcoming plan year. They specify the amount of money they want to allocate to the flexible spending accounts. The money set aside is automatically deducted from your employee’s salary on a pretax basis and deposited into the FSA before federal, state and FICA taxes are withheld. Employees may obtain reimbursement for eligible out-of-pocket medical, dental or vision expenses received by them or their eligible dependents.
- Pay less in federal, state, and FICA taxes
- Gain more control over how benefit dollars are spent
- Have more disposable income
- Have a convenient way to pay for medical expenses with tax-free dollars
- Frequently Asked Questions: Review the answers to some common questions about flexible spending accounts.
An annual maintenance fee is assessed. For two -14 employees, there is an annual fee of $50. Employers with more than 15 employees will pay $100 per year.
Utilizing the tax code for your business can be an incredible way to enhance your employee benefits package, while simultaneously boosting your margins. Talk with your BCBSKS representative to get started.
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