Flexible spending accounts
Flexible spending accounts enable employees to set aside pretax dollars through payroll deductions to pay for eligible healthcare and dependent care expenses — saving both the employee and their employer money.
Flexible spending accounts (FSAs) can save both employees and employers money. These accounts enable employees to set aside pretax dollars through payroll deductions to pay for eligible healthcare and/or dependent care expenses.
Because FSAs are funded through pretax payroll deductions, employers who offer FSAs do not pay Social Security and Medicare (FICA) taxes on their employees' contributions to these accounts (except for ministers' contributions).
Employees save, too, since their FSA elections are deducted from their pay before FICA or federal income taxes are taken out, lowering their taxable income. And in most states, state income taxes do not apply.
Types of FSAs
The Board of Pensions partners with HealthEquity to offer two types of FSAs:
- Healthcare FSAs allow participants to pay for eligible medical, dental, and vision expenses, such as deductibles, copays, and coinsurance for doctor's office visits and prescription drugs — all with pretax dollars.
- Dependent care FSAs can be used to pay for eligible expenses for children under age 13 and certain older family members. Examples of eligible expenses include in-home child care, payments to licensed day care facilities, before- and after-school programs, and adult day care.
Eligibility to participate
Employers may choose to offer either or both types of FSAs.
You may offer a healthcare FSA to employees who are eligible to enroll in the PPO or EPO option of the Medical Plan or an eligible, qualified healthcare plan you offer other than those available through the Benefits Plan of the Presbyterian Church (U.S.A.).
You may offer a dependent care FSA to any employee.
A self-employed individual is not considered an employee for FSA purposes and, therefore, is not eligible to participate. However, employed ministers are considered employees for federal income tax purposes even though they are considered self-employed for Social Security purposes (paying SECA instead of FICA).
Cost
Employers pay under $4 per participant per month for each participant who establishes a healthcare and/or dependent care FSA. Only one fee is charged per participant, whether the participant has one type of FSA or both. HealthEquity bills each employer directly for this monthly fee. There are no set-up or other annual fees for these accounts.
FSAs are typically funded through employee contributions; however, employers may choose to contribute to them as well (limits apply).
Interested in offering flexible spending accounts? Here's what to do next.
For current employers
If you currently offer benefits through the Benefits Plan of the Presbyterian Church (U.S.A.), you may indicate that you are interested in offering this benefit when you update your Employer Agreement for the following year.
For new employers
If you do not currently offer benefits through the Benefits Plan and would like to learn more about its features and how the Board of Pensions serves employers, call our Employer Services team at 800-PRESPLAN (800-773-7752) (TTY: 711) to discuss how we can best meet your and your employees' needs.
About HealthEquity
HealthEquity is a national leader in health savings and spending account administration. With $10.2 billion in assets under management, HealthEquity guides more than 14 million members across the United States in saving and spending wisely on their healthcare.