FSA Product Benefits
Flexible Benefit Plans help employers contain benefit costs, meet diverse employee needs, and increase employee satisfaction. In addition, like HSAs and HRAs, Flexible Benefit Plans generate substantial tax savings for both employers and employees.
Through employee salary redirection, employees purchase "qualified benefits". Qualified benefits are benefits that may not be included in the employees' gross income. A fund is established to pay eligible expenses for the participating employees.
Sterling offers the following services under Flexible Benefit Plans:
- Healthcare Flexible Spending Account (FSA)
- Limited Purpose or Post Deductible FSA to coordinate benefits with other plans.
- Dependent Care Flexible Spending Account (FSA)
- Transit and Parking Benefits
The Healthcare FSA and Dependent Care FSA are governed by Section 125 of the IRS Code and allow for payment of unreimbursed medical expenses and dependent care assistance expenses. FSAs are subject to a "use it or lose it" rule requiring forfeiture of unused amounts at the end of the plan year. Funds are not portable if the employee leaves the employer sponsoring the plan.
Transit and parking benefits are governed by Section 132 of the IRS Code and are not subject to the "use it or lose it" rule. Funds can roll over to the next plan year.
Benefits of these plans to employers include:
- Benefits cost savings when salaries are reduced through pre-tax payroll redirection. The greatest savings to the employer is often the employer portion of Social Security and Medicare, which currently equals 7.65% of each dollar of salary reduction (1.45% for those covered only by Medicare and not by Social Security).
- Other salary-related benefits that may result in employer savings include unemployment and workers compensation, short and long term disability coverage, life insurance, and pension.
For more information, go to Products and Services.