Healthcare FSAs

Tax-saving benefits

When you offer healthcare flexible spending accounts (FSAs), your employees can set aside pretax dollars through payroll deductions to pay for eligible medical, dental, and vision expenses — enabling them to save money by lowering their taxable income.

Employers who offer healthcare FSAs save money, too. Because FSAs are funded through pretax payroll deductions, employers who offer them do not pay Social Security and Medicare (FICA) taxes on their employees' contributions to these accounts (except for ministers' contributions).

Eligible expenses

Employees who participate in a healthcare FSA can use their account funds on a variety of eligible expenses for themselves, their spouse, and their eligible children, such as:  

• deductibles, copays, and coinsurance amounts for doctor's office visits and prescription drugs;
• other expenses not covered or reimbursed by any healthcare plan, such as glasses, contact lens solution, and laser vision surgery.

Once enrolled in a healthcare FSA through the Board of Pensions, the employee receives a convenient Visa debit card from HealthEquity, the Board's partner in administering FSAs. When they have an eligible expense, they just swipe the card to pay for it, and the amount is automatically deducted from the account.

Employer contribution amounts

Employers may contribute to employees’ healthcare FSAs and match up to the IRS annual limit. Employer contribution amounts are established upfront for each plan year and employees may contribute less than their employer:

• If the employee contributes less than $500, the employer can contribute up to $500, even if the employee’s contribution is $0.
• If the employee contributes more than $500, the employer may only match the employee contribution amount.

Read more details about how healthcare FSAs work.