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Flexible Spending Accounts (FSA)
For Health and Dependent Care IRS Section 125
 How FSAs Work
Directing a portion of an employee's earnings into a company's Flexible Spending Account (FSA) essentially 'banks' money in a tax-free account. The funds are held by Benefit Managers Company for the employee and used to pay health expenses that are not covered by insurance or dependent care expenses.
- A predetermined amount is deducted from the employee's paycheck every pay period prior to calculation of tax withholding, then forwarded to Benefit Managers Company.
- When the employee incurs an eligible expense, they submit a claim form to Benefit Managers Company.
- Funds from the account are used to pay claims throughout the year as they are incurred.
- Health care expenses may include physician prescribed medical, dental, vision, hearing, drug prescriptions, or others, which are not covered by insurance, such as co-pays and deductibles.
- Dependent care expenses may include care for children (under age 13), or other dependents who are physically or mentally incapable of self-care.
- FSAs are available regardless of whether or not a company sponsored health plan is available. Return to top
Who is Eligible
Most company employees are eligible for an FSA, regardless of whether or not a health plan is offered by an employer. The employer controls eligibility within IRS Section 125 guidelines.
Participant Benefits
- Employees pay lower FICA, Federal, and State income taxes. Most participants enjoy a tax savings of 29% to 40% annually, depending upon their individual incomes and tax situations.
- Employees control expenditures from their accounts.
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Benefit Managers Company is a member of the Employee Benefits Institute of America
and Employers Council on Flexible Compensation.
These products are not insurance plans, nor are they intended to replace insurance.
All plans are compliant with tax codes of the United States Internal Revenue Service.
Copyright © 2003 Benefit Managers Company, All Rights Reserved |
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