A flexible spending account is a benefit many employees want, but without a full-time human resources professional or plan administrator, small businesses may be unable to offer FSAs. Time Employer Services can set-up and manage FSAs, so you can provide the best benefits for your employees without worrying about administration and compliance requirements.
Unlike healthcare savings accounts, which are only available to workers with a high-deductible insurance plan, FSAs are open to everyone. Employees can use funds from FSA accounts to pay for health care copayments, some prescription medicines, daycare costs for children and other expenses.
FSA contributions are not subject to taxation, so any amount employees contribute essentially reduces their taxable annual income. The IRS limits how much money employees can deposit into an FSA – in 2016, the maximum allowable individual contribution is $2,550. But an employer could contribute additional amounts.
Employers may choose whether to contribute to employee FSAs. They may also allow employees to carryover $500 of unused FSA funds into the next calendar year, or to offer a grace period of 2 months and 15 days at the start of the year, during which employees can use FSA funds leftover from the previous year. However, employers are not obligated to offer any of the these additional perks.
Time Employer Services understands how to administer FSAs and can handle all aspects of account administration – from initially enrolling employees in FSA plans to ensuring all contributions are compliant with federal tax laws.
Maybe you don’t have the staff now to oversee an FSA, but you plan to grow your human resources team in the future. Time Employer Services gives businesses the flexibility to scale – we can provide full-service benefits management, or handle just a few tasks on your behalf.