1. Flexible Spending Accounts
Savings for Both Employers and Employees

2. Agenda What is a Flexible Spending Account (FSA)?
Why should you offer FSAs?
Employer/employee savings
How does an FSA work?
Employee contributions
Qualified expenses
Debit card spending
FSA funds rollover
Employee engagement & account access
Online & mobile account access

3. What is a Flexible Spending Account?
Getting Started

4. Flexible Spending Accounts (FSAs)
What is an FSA?
A flexible spending account is an employer- sponsored benefit account that allows employees to set aside pre-tax funds to help pay for eligible out-of- pocket healthcare expenses.
Employer benefits:
FICA tax savings (lower reported wages)
Enhanced overall benefits package
Improved employee engagement / satisfaction
Employee benefits:
Lower taxable income (increased take-home pay)
Receive up to 30% savings on qualified healthcare expenses

5. Why Should You Offer FSAs?

6. Why Should You Offer FSAs?
Sample Employee Savings*
Employee Savings
Federal tax rate
Annual FSA contribution
Estimated annual employee savings
15%
$1,500
$340
$2,500
$566
25%
$490
$816
33%
$610
$1,016
Employee savings:
Lower taxable income: FSA contributions are made pre-tax – before federal, social security, and most state taxes, meaning:
Employees can reduce their taxable income and maximize their take-home pay
Savings on qualified healthcare expenses: Pre-tax contributions allow employees to save up to 30% when spending pre-tax dollars they otherwise wouldn’t have.
*For illustrative purposes only. Based on 7.65% FICA. Individual tax situations may vary. Please consult a tax adviser.

7. Why Should You Offer FSAs?
Sample Employer Savings
Employer Savings
Total # of FSA participants
200
Avg. annual employee election
$1,500
Estimated annual employer tax savings
$22,950
Employer savings
FICA tax savings Pre-tax employee FSA contributions lower your payroll & FICA tax responsibilities.
Other tax savings Employers may save on:
Federal Unemployment Taxes (FUTA)
State Unemployment Taxes (SUTA)
Workers compensation taxes
*For illustrative purposes only. Based on 7.65% FICA. Individual tax situations may vary. Please consult a tax adviser.

8. How Does an FSA Work?

9. How Do FSAs Work? Summary
An employee determines an annual election amount
Annual election amount is deducted evenly from each pay check – on a pre-tax basis
The full annual election is available on day 1 of the plan year for participants to spend on qualified out-of-pocket expenses
FSA debit card for spending
Online/mobile engagement tools
At the end of the plan year, participants can rollover up to $500 of unused funds into the future plan year
*You may also opt to offer a grace period in which employees are given a post-plan window to spend remaining funds

10. Employee Contributions
How do FSAs Work?
Employee Contributions
During open enrollment, employees plan and select an annual election amount
Annual FSA maximum: $2,500
Rule-of-thumb: Employees should estimate annual out- of-pocket healthcare expenses
Funding amount cannot be changed mid-year without a qualified life changing event
The annual election amount is divided evenly by paycheck, funds are deducted on a pre-tax basis and placed in the employee’s FSA
The full annual election is immediately available to the employee on day 1 of the plan year
Even though funds have not yet been withdrawn from future paychecks
*New to FSAs* Up to $500 of unused funds can be rolled forward into the future plan year. You may also elect to offer employees a grace period in which to use remaining funds

11. How do FSAs Work? Qualified Expenses
Employees can use tax-free contributions to pay for qualified healthcare expenses
Qualified expenses include:
Co-pays, coinsurance, deductibles
Dental and orthodontia
Eye exams, contact lenses, eyeglasses
Prescriptions
Over-the-counter medical supplies
Lasik
And more! View the full list of eligible expenses:
Employees can receive up to 30% savings on eligible expenses, thanks to the nature of their tax-free contributions

12. How do FSAs Work? Debit Card Spending
Debit cards give employees easy access to FSA funds
Works just like a standard debit card, but funds are spent from the employee’s FSA
Real time, on-demand access to funds
Eliminates cash purchases & reimbursement hassles
Point-of-sale purchase, provider payment, direct deposit employee reimbursement
Debit cards can be used to purchase qualified healthcare products/services at:
Physician & doctor offices
Hospitals
Pharmacies
Opticians / vision care locations
Dental offices
And, even qualifying retail stores!

13. The New FSA Funds Rollover Policy
How do FSAs Work?
The New FSA Funds Rollover Policy
In 2013, the US Department of Treasury modified the long-standing FSA ‘use it or lose it’ rule
FSA participants can now rollover up to $500 of unused funds into the future plan year
Future year maximum election is not impacted (remains $2,500)
Employer benefits:
Increased enrollment & elections = greater tax savings
Higher employee benefit package satisfaction
Employee benefits:
Greater flexibility - No need to precisely budget & plan healthcare expenses
Lower risk – Employees reduce the risk of losing money
Reduced waste – No more reckless end-of-year spending
More savings – Less forfeiture risk = higher elections and tax savings
You (the employer) can opt to offer a grace period rather than rollover; where employees are given a post-plan expiration window to spend remaining funds

14. Employee Engagement & Account Access

15. 24/7/365 Account Access & Management
Online FSA Access
24/7/365 Account Access & Management
Online account access engages participants and increases FSA value
Co-branded employer/administrator experience
Access to account information & transaction activity
Communication and alerts management
Replace/re-order debit cards
FSA features:
Planning tools & calculators
FSA statements & transaction history
Reimbursement requests
Bill payment

16. Custom mobile application
Mobile FSA Access
Custom mobile application
Engage FSA participants ‘on the go’:
Supports Apple and Android smartphones and tablets
Available via the Apple App Store & Google Play
Participant engagement features:
View account balances
View transaction history
Attach receipts
Edit alerts
Contact administrator

17. Questions?