Flexible spending accounts provide employees and HR resources peace of mind in managing rising healthcare costs. isolved lowers the cost and complexity of plan administration while putting the focus back on employee experience.
Employers can choose the maximum contribution, up to the annual limit set by the IRS, they allow employees to take. That contribution gets deducted from the employee’s paycheck each pay period in equal installments throughout the year. This does not count as taxable income, so employees have an immediate tax savings.
Employers also save because you do not have to pay Social Security and Medicare (FICA) taxes on employees’ contributions to these accounts. You can use isolved’s savings calculator to estimate your potential savings you’ll get by offering an FSA to your employees. The savings usually outweighs the costs of administering the plan.
The IRS determines which products and services fall under the definition of “medical care.” According to IRS Tax Code 213(d), “Medical care expenses must be primarily to alleviate or prevent a physical or mental disability or illness. They don’t include expenses that are merely beneficial to general health such as vitamins or a vacation.”
There are thousands of products and services that FSA funds can be used for, so we aren’t going to list them all here, but they fall under the following categories:
If you’d like to look up specific items, check out the FSA store for the most comprehensive eligibility list.
Annual contribution limits are set by the IRS and they do change from time to time. isolved stays on top of these changes and you can see all the contribution limits here.
As of October 31, 2013, the U.S. Treasury Department modified its Health Flexible Spending Account (FSA) Use-or-Lose rule to allow up to a $570 carryover of Health FSA funds. The carryover option is based solely on the employer’s plan design. Not every company allows a carryover. Some employer plans may establish a lower maximum limit than $570, but it must be uniformly applied to all eligible participants. The carryover is applicable only to Health FSAs (not to Dependent Care FSAs). Any unused amount above the carryover limit is subject to forfeiture and cannot be cashed out or transferred to other taxable or nontaxable benefits (e.g., HSAs).
With an isolved Flexible Spending Account, you'll be freed from tedious recordkeeping. isolved will guide you through plan design options and provide up-to-date plan documents. Once you select one of our simple and secure submission formats, you'll supply a list of participants and their annual elections. isolved will provide welcome documents; a comprehensive resource center and a Participant Support Center to help your participants get started with their Health and Dependent Care FSAs. isolved takes care of all your documentation and recordkeeping needs and provides you with detailed reports–all while protecting the tax-preferred status of your benefit!