Flexible Spending Accounts: Educating employees to use it, not lose it
Flexible spending accounts (FSAs) are employer-offered plans allowing employees to set aside money, tax-free, for certain out-of-pocket health care costs. For 2017, employees can contribute a maximum of $2,550 for medical expenses. Employees not pay federal income tax or employment taxes on contributions or employer FSA contributions. Also, withdrawals may also be tax-free for qualified medical expenses.
Two IRS publications are great starting points for FSA users. Publication 969 lays out some of the rules for using a flexible spending account. Of note: FSA users can't use FSA funds to 1) pay for health premiums, 2) pay for care covered under another plan or 3) long-term health insurance coverage.
However, FSA funds can be used for a laundry list of qualified expenses, and IRS Publication 502 is a good resource to utilze in this regard. One key exception: over-the-counter drugs are not FSA eligible.
Depending upon the plan, employees can either roll over $500 from their accounts into the next year, or they are given an extra 2.5 months (through March 15) to use the excess funds (up to $500). If you are an employer, you can offer either option, but not both.
While employees can roll over some of their FSA contributions, the clock is ticking to make sure the account dollars that need to be spent are put to good use. The website FSAStore.com offers a wide range of FSA-eligible goods, including contact lenses, breast pumps for new mothers and insulin needles.
The Plexus Groupe offers expertise in flexible spending accounts, and our PlexFlex Administrative Services team can help you establish and maintain FSA plans. For more information, contact a Plexus client service team representative at 847-307-6100 (Deer Park, Ill. / Chicagoland), 312-606-4800 (Chicago / Loop), 972-770-5010 (Dallas) or 405-840-3033 (Oklahoma City). You can also reach out to us via the Web. No one wants to see FSA dollars go to waste or FSA plans go amiss; we can help.
