Here are the key features of Flexible Spending Accounts that you should know. They'll help you decide if FSAs are right for you and your employees.
What is an FSA?
A flexible spending account (FSA) allows eligible employees to set aside pre-tax money via payroll deductions into a tax-free account and use this money to pay for eligible health care expenses. Zenefits offers two types of FSAs:
- Health Care FSAs pay for out-of-pocket health care expenses (e.g., doctor copays, prescriptions, deductible expenses, and other FSA Eligible Expenses) not covered by insurance.
- Child & Elderly Care FSAs pay for the care of a dependent child or adult so that employees can work or look for work (Learn More).
Employees can enroll in one or both types simultaneously in Zenefits. See this page for a comparison of the primary differences between Health Care and Child & Elderly Care FSAs. The only eligibility requirement for FSA is that the employee is offered benefits. They do not have to enroll in benefits, but the company just needs to offer medical benefits to the employee.
Why should I offer FSAs to my employees?
Offering FSAs can help your company and your employees in the following ways:
- FSAs help employees make the most of their salaries while paying less in taxes.
- FSAs can help you reduce your employment taxes.
- FSAs can help attract top talent and drive retention when promoted as part of your company's benefits package.