Flexible Spending Account (FSA) administration poses a unique challenge to many organizations, but consultants offer expertise and experience that can help any employer understand employee benefits.
FSAs allow employees to receive health care reimbursement up to a certain amount from employers. Workers can pay for specific medical expenses on a pre-tax basis as long as they meet IRS guidelines, allowing employees to avoid paying federal income, state income and Federal Insurance Contributions Act (FICA) taxes on FSA contributions. Employers benefit from FSAs as well because they do not pay FICA and Federal Unemployment Tax Act (FUTA) taxes as employees' annual incomes are decreased.
Employees select benefits at the beginning of each plan year as they determine how much pre-tax salary to contribute to the plan. Workers face challenges with FSAs such as the "use-it-or-lose-it" rule that states workers must use their funds before the end of the year or risk losing them. Companies must understand IRS guidelines to implement FSAs in an organization. The IRS created tax code Section 125 to outline the regulations.
Employee benefit consultants can answer any questions human resource managers face regarding FSAs. Implementing FSAs may appear challenging, but consultants offer solutions to suit any organization's needs.
