What is an FSA?
Flexible Spending Accounts (FSAs) let employees use pre-tax income for qualifying out-of-pocket medical expenses. Employers may make contributions to an FSA, but this is not required. Employees choose how much they contribute to your FSA plan, within the limits you choose, and you determine which expenses qualify.
How does it work?
With most FSA plans, employees submit claims for reimbursement for any out-of-pocket medical expenses they incur throughout the year. They then receive reimbursement.
However, with our Driven125 FSA option, employees receive debit cards for paying out-of-pocket expenses. This makes it quick and easy for employees to take advantage of their FSA plan, and our Driven125 app keeps all the information they need to know (like their account balances) right at their fingertips. Employees also have the ability to check an over-the-counter item for eligibility right within the app.
Employer Contribution Limit (Per Employee)
Tax Savings on FSA Funds
Benefits for Employers
Employees who are eligible for your benefits plan may contribute. They do not need to be enrolled in a benefits plan to enroll in an FSA.
FSAs can be offered alongside any medical and/or dental plan. That said, employees who enroll in an HSA can only enroll in a Limited Purpose FSA.
Any remaining, unused employer FSA contributions can be used for administrative costs incurred throughout the plan year.
A Dependent Care FSA is a benefit that allows employees to choose how much of their paycheck they’d like to set aside, before taxes are taken out, for eligible dependent care expenses each year. The Dependent Care FSA lets employees pay for eligible dependent care expenses while they reap the benefits of additional tax savings. Employees are spending the money either way. This way, eligible childcare and other dependent care costs are a little less.
The IRS sets the maximum dollar amount you can elect and contribute to a Dependent Care FSA. The 2021 annual contribution limit is: Per household - $5,000, per person (if married or filing separately) - $2,500
Funds will be available to the employee as they’re deducted from the paycheck and contributed to the plan. This means when payroll is processed the Dependent Care FSA contributions will be applied to employees account and available for reimbursement. HFSA funds are available at the beginning of the year.
In order to make changes to FSA elections after open enrollment, employees need to experience a qualifying life event, such as:
- Change in marital status
- Change in the number of dependents
- Increase due to birth, adoption or marriage
- Decrease due to death, divorce or loss of eligibility
- Gain or loss of eligibility due to a change in participant, spouse or dependent employment status
- Change in daycare providers
- Child turning age 13
- Increase or decrease in the cost of qualifying daycare expenses
- Judgement, decree or order requiring a change in coverage
The list includes, but is not limited to, eligible:
- Childcare center, babysitter, nanny (birth through age 12)
- Summer day camp
- Before or after-school care
- Disabled dependent and/or spouse care
- Elder care
Employees are eligible if they and/or their spouse (if applicable) are gainfully employed, looking for work, or are attending school on a full-time basis.