A Health Flexible Spending Account allows employees to use pre-tax dollars to pay for medical bills not covered by their insurance. This not only saves your employees on federal/state income taxes and FICA/Medicare taxes, it also saves the employer’s share of FICA/Medicare taxes as well. In other words, this saves your company money and builds morale with your employees by allowing them to save money on their taxes as well!
Here’s how it works:
- An employee decides how much of their salary should be set aside before taxes are calculated.
- This amount is automatically deducted from their paycheck every pay period, just like any other payroll deduction, and is deposited into their Health FSA account.
- The employees either pays their out-of-pocket expenses with a special MasterCard© debit card, or pays up-front, then submits a claim and documentation and a reimbursement is made from their own account.
Out-of-pocket expenses include:
- Eyeglasses and contact lenses
- Medical insurance deductibles
- Chiropractic services
- Dental treatments
- X-ray and laboratory services
The flexibility of an FSA plan makes it the best option for small to medium sized businesses. For more information, click here.