Flexible Spending Accounts (FSA)

A Flexible Spending Account is an employee contributed account that allows them to set aside tax-free dollars that can be used throughout the year for qualified healthcare or childcare expenses.  This allows employees to take home a larger paycheck by reducing their taxable income. FSAs are also known as flex plans, Cafeteria Plans, or Section 125 plans.

How an FSA Works

During the open enrollment period, employees will estimate their out-of-pocket healthcare expenses for the upcoming year and make an annual election based upon their expense needs. Payroll deductions are made equally each pay period throughout the plan year.  Employees can then use their FSA to pay for eligible expenses.

Funds placed into the plan avoid both Federal Income Tax and FICA, creating a tax savings for both your client and their employees. Employers cannot contribute to employee FSAs.

FSA Plan Designs

We offer several different types of Flexible Spending Accounts.  As part of your client’s plan design, they can choose to offer their employee’s an ASi Visa® Card that participants would use to pay for their eligible expenses.

Each FSA is subject to the “Use It or Lose It” Rule.  This means that if participants do not spend their entire elected amount during the year, left over funds will be forfeited back to the plan.  However, there are options your client can choose to offer so their employees don’t completely lose their funds. For more information about which FSA plans offer these advantages, click on each FSA option below.

A Healthcare Flexible Spending Account allows participants to pay for eligible medical, dental, vision, and prescription expenses.  The 2020 FSA yearly maximum contribution amount is $2,750 per participant.  The maximum contribution amount is reviewed each year and can be raised due to cost of living considerations.  Employees cannot contribute more than the maximum per year.  To counteract the “Use It or Lose It” Rule with the HFSA you can choose one of the following options:

Rollover

The rollover feature allows participants to rollover up to $550 from one plan year to the next FSA plan year.  Any funds above the $550 limit would be forfeited back to the plan.

Grace Period

This optional feature allows participants an extra 2.5 months at the end of the plan year to incur expenses against their Healthcare FSA.

A Limited Purpose Flexible Spending Account (LPFSA) accompanies a Health Savings Account (HSA).  The LPFSA only covers dental and vision expenses.  Medical and prescription expenses are meant to be paid by the employee’s HSA. The 2020 FSA yearly maximum contribution amount is $2,750 per participant.  The maximum contribution amount is reviewed each year and can be raised due to cost of living considerations.  Employees cannot contribute more than the maximum per year.  To counteract the “Use It or Lose It” Rule with the LPFSA you can choose one of the following options:

Rollover

The rollover feature allows participants to rollover up to $550 from one plan year to the next FSA plan year.  Any funds above the $550 limit would be forfeited back to the plan.

Grace Period

This optional feature allows participants an extra 2.5 months at the end of the plan year to incur expenses against their Limited Purpose FSA.

The Dependent Care Assistance Program allows participants to set aside pre-taxed dollars for eligible childcare or dependent care expenses.  The yearly maximum contribution amount is $2,500 for an individual or $5,000 for married employees.  To counteract the “Use It or Lose It” Rule with the DCAP you can choose to provide a Grace Period.

Grace Period

This optional feature allows participants an extra 2.5 months at the end of the plan year to incur expenses against your DCAP.

The Full Flexible Spending Account includes both a Healthcare FSA and the Dependent Care Assistance Program.  For more information on those plans, please click on the names and the information will drop down.

A POP allows you and your employees to pay insurance premiums with pre-tax dollars. POPs are needed if you want your insurance premiums to have a pre-tax savings benefit. However, they are not needed if you are offering a Healthcare FSA, Limited Purpose FSA, or Dependent Care Assistance Program. POPs allow employees to save on both their FICA and Federal Income Tax charges for their amount spent on insurance premiums that are deducted from their paychecks.  When employees’ gross pay decreases, employers pay less in matching FICA taxes, which results in substantial employer savings.  At ASi, we provide the plan documents you will need for IRS requirements to allow money to be deducted on a tax-free basis for insurance premiums.

What Expenses Are Eligible?

Healthcare FSAs cover a variety of healthcare expenses including, but not limited to:

  • Deductibles & Co-Pays
  • Prescription Drugs
  • Dental & Orthodontic Services
  • Eyeglass, Contacts & Eye Surgery
  • Chiropractic Services
  • Mental Health Care
  • Smoking Cessation Program

For a complete list of eligible services, please visit here.

Limited Purpose FSAs are only eligible for dental and vision related expenses.

DCAP benefits covers your childcare or dependent care expenses incurred while your employees and their spouse are both working.

For a complete list of eligible services, please visit here.

A Full FSA includes both the Healthcare FSA and DCAP.  To view their eligible expenses, please click on their title to expand the information for those FSAs.

Employer Features

Your clients become part of the ASi family, which means providing them with the best features within the industry.  The features listed below are included as part of our administrative services.

  • Cost Savings on payroll taxes for every dollar employees contribute to their FSAs
  • Customizable Benefit Plans and Materials
  • Online and Mobile App Account Access
  • Dedicated ASi Teams Who Provide Personalized Customer Service
  • Draft Plan Documents, Including the Basic Plan Document, Adoption Agreement, and Summary Plan
  • Assist in Plan Design, Including Plan Design Options and Features
  • Non-Discrimination Testing (Link to Compliance section Non-Discrimination Testing)
  • Assist in Group Enrollment
  • Marketing Materials for Your Client’s Employees
  • Timely Claims Processing
  • Provide Standard Reports Upon Request

Participant Features

We know your client’s employees are the heart of their business, which means we provide them with great tools and resources to help them manage their benefits.

  • Monthly Savings & Larger Take-Home Pay
  • Online Employee Portal
  • Mobile App
  • Online and Mobile Claim Submission
  • ASi Visa® Card
  • Easy to Understand Benefits Breakdown

Want to Know More About this Service?

Check out our FAQs or contact our Sales Team

Phone: 866-777-1320 or 559-256-1320
Email: salesteam@asibenefits.com