Health Care FSA
A Flexible Spending Account (FSA) allows an employee to set aside a portion of their earnings to pay for qualified medical expenses. Money deducted from an employee's pay into an FSA is not subject to payroll taxes, resulting in substantial payroll tax savings.
Some employers choose to issue a benefits card to their employees who participate in the FSA. Participants may use the benefits card to pay for their FSA-eligible expenses at the point of sale. Pharmacies and grocery stores who choose to accept the debit card as payment must disallow transactions at point of sale if the participant attempts to pay for items that are not eligible under an FSA.
In addition, employers still must require employees to provide itemized receipts for all expenses charged to the benefit card. The IRS allows employers to waive this requirement when an individual uses the benefit card at a pharmacy or grocery store that complies with the above procedure. The IRS also allows employers to waive this requirement when the amount charged to the benefit card is a multiple of a co-pay of the employee's group health insurance plan. Careflex prefers actual insurance Explanations of Benefits (EOBs) clearly representing the patient portion of any medical expense, over other, more vague documentation.
Health Care FSA - Limited
The Health Care Flexible Spending Account - Limited (FSA-L) allows employees to set aside additional tax-free dollars to pay for out-of-pocket dental and vision expenses. Money deducted from the employees pay for the FSA-L is not subject to Federal Income Tax and FICA, creating a tax savings for both the employee and the employer.
Dependent Care FSA
A Dependent Care Account (DCA) allows employees to set aside pre-tax dollars out of their paychecks to pay for eligible day care or dependent care expenses. The employee avoids both Federal Income Tax and FICA, creating a tax savings for both the employee and the employer.