Vice President, Employee Benefits, Rebecca Scandaliato explains why flexible spending accounts benefit both employers and employees.
A Flexible Spending Account (FSA) allows employees to designate a specified amount of money to be utilized on a tax-free basis through a voluntary salary reduction on qualified medical expenses.
The maximum amount of salary reduction an employee can make is $2,600 per year. Health FSAs are subject to “Use-it- or-Lose- It”, with exceptions for a Grace Period or $500 carryover.
The FSA is a win-win for both employees and employers, as employees save 25% or more on their out of pocket medical expenses and employers save 7.65% by not matching FICA and Medicare taxes on those same funds. Sufficient enrollment in an FSA typically results in a net REDUCTION in benefits spend by the employer.
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