What Is an FSA?
While typical group healthcare insurance can be very effective for many of your business’s employees, out-of-pocket medical expenses such as deductibles and co-payments, and coinsurance can still present serious financial challenges.
A Flexible Spending Account (FSA), also known as a Flexible Spending Arrangement, is a way for employees (and employers if they chose) to put money aside specifically to pay for these out-of-pocket medical expenses. This isn’t a typical investment, as the money doesn’t grow like in an HSA, but it is an effective way of managing money for a specific purpose.
It also encourages employees to seek necessary medical treatment, instead of avoiding it which could worsen their health problems and leave them unable to work.
FSAs Are Tax-Free
The other big advantage of FSAs is that money put into them isn’t taxable, reducing payroll taxes for employers.
When Are Contributions Made Available to Employees?
It’s important to note that any contribution from the employer is payable as a lump sum at the start of the year, and will be available to an employee even if they leave their job. Employees pay their FSA contributions over the year in regular installments.
If you think an FSA might help your employees cover out-of-pocket medical expenses, request a free FSA quote below today, and an MSIG employee benefits specialist will walk you through your options!
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As an independent agency, we are here to help you find the right FSA solution.
As an independent agency, we are here to help you find the right solution.