Securing Health Care

Flexible Spending Accounts (FSA)

Convenient & Controlled

The Flexible Spending Account (FSA) may be offered to you as part of your employer’s benefit package. Through an FSA, you can set aside pre-tax dollars for eligible medical, dental, vision and dependent care expenses. Your contribution is deducted from your paycheck in equal amounts each pay period. Depending on your expenses, an FSA could save you 25% or more on eligible expenses. However, it is important to plan ahead and anticipate medical expenses before enrolling in a FSA to avoid having to forfeit any unused funds.

There are four (4) types of accounts that could be offered under a Flexible Spending Account program, each offering unique features and opportunities to save money: Health Care, Limited Purpose, Dependent Care and Adoption Service.

Health Care – Save Smarter, Not Harder

We help you save now so your wallet doesn’t pay for it later.

Frequently offered alongside traditional co-pay health plans, the Health Care FSA helps employees pay for expenses not otherwise covered by their insurance. This account provides you with upfront access to your full annual election on the first day of the plan year to help you pay for eligible medical, dental and vision expenses incurred by you, your spouse and dependents.

Limited Purpose – Maximum Multiple-Plan Benefits

Optimize your benefits with Limited Purpose FSAs.

Similar in many ways to the Health Care FSA, the Limited Purpose FSA only reimburses eligible dental and vision expenses. These accounts are often offered as part of a benefits program that also includes the Health Savings Account (HSA). This is because you cannot have both the HSA and Health Care FSA since both reimburse medical expenses. A person may choose to enroll in both the HSA and Limited Purpose FSA to maximize their tax savings on eligible dental and vision expenses.

Dependent Care – Spread the Wealth

With Dependent Care, we ensure that your children can always depend on you.

This helps many of today’s families pay for costs associated with the care of their children. A dependent care FSA offers a way to better manage these expenses and gain real tax savings. This account allows you to direct part of your pay, on a pre-tax basis, throughout the year to reimburse yourself for certain dependent care expenses incurred so that you can work. These expenses commonly include before and after school program, child and elder daycare, summer day camp, and preschool.

Adoption Service – Uncomplicate the Adoption Process

Expand your family without breaking the bank.

This provides those planning on adopting a child a great way to help manage the out-of-pocket expenses incurred during a legal adoption process while also gaining a tax savings. With this account, you can set aside part of your pay on a pre-tax basis to reimburse yourself for adoption related expenses such as adoption fees, court costs, attorney fees and related travel costs.

Flexible Spending Account

Cost Savings

An individual earns $45,000 annually and elects to contribute $2,850 annually to a Healthcare FSA to cover out-of-pocket medical costs.

YOUR ESTIMATED FSA COST SAVINGS EXAMPLE

Without FSA With FSA
Gross Earnings $45,000 $45,000
FSA Contributions -$0.00 $2,850
Adjusted Gross Pay = $45,000 $42,150
FICA, Fed/State Taxes -$6,750 $6,322.50
Out-of-Pocket Medical Expenses -$2,700 $2,700 (covered by FSA)
Total Take Home $35,600 $33,127.50

TOTAL SAVINGS WITH THE FSA: $427.50

Who Is Eligible

Employee Eligibility

In general, an individual must simply be employed by an employer who offers one and be otherwise eligible for benefits. Note: Even if the eligible employee chooses not to enroll in their company’s health insurance (for example, if an employee chooses to be on their spouse’s insurance plan instead) they can still sign up for the FSA. Owners of the company can participate in the FSA solely on their tax filing status. Below is a summary of those rules.

  1. C-Corporation Owners - May participate in an FSA and receive reimbursements tax free. C-Corp owners may use their FSA to reimburse their medical expenses, as well as those of their spouse and dependent.
  2. Sole Proprietors - Cannot receive reimbursements tax-free. However, if the sole proprietor is married, and their spouse is a W-2 employee, then the spouse can receive the tax-free benefit. In this case, the FSA is set up in the spouse's name and the sole-proprietor is listed as a dependent.
  3. Partners - Cannot receive reimbursements tax-free. However, if the partner is married, and their spouse is a W-2 employee (but not a partner), then the spouse can receive the benefit tax-free. In this case, the FSA is set up in the spouse's name and the partner is listed as a dependent
  4. S-Corporation Owners - That own >2% of the company's shares and their spouse, parents, children, and grandchildren, cannot receive reimbursements tax-free (reimbursements are subject to federal income tax withholding).
  5. LLC's - Owner participation varies based on the way the LLC files taxes (as a Partnership, S-Corp, or C-Corp).

Contribution Limit

Annual Contribution Limits

FSA Plan Type 2022
Health Care $2,750
Limited Purpose $2,750
Dependent Care

 $5,000 
  - If you are married, filing a joint return or you are head of a house

 $2,500
-
If you are single or married, but filing separate

Adoption Assistance

$14,080
  - Phase-out income thresholds: Begin at $211,160 and end at $251,160

 

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