Tag: Healthcare Flexible Spending Accounts

A Growth Spurt for FSAs with New Stacking Opportunity

by Teri Lowder, Director of Compliance

Since the inception of Health Savings Accounts (HSAs) in 2004, employers, brokers, and members have struggled with how to manage their company’s Flexible Spending Account (FSA) for healthcare along with the new opportunity to add a HSA compatible high deductible health plan coupled with a HSA – and take advantage of all the tax savings these two vehicles allow.

The IRS came out with some very difficult-to-understand “stacking rules” in 2004, pertaining to how this could be accomplished. This left few options other than terminating the healthcare FSA, or amending the plan to allow a limited purpose or post-deductible FSA. Well, relief is in sight! With the ability to rollover $500 at the end of the plan year on the healthcare FSA, additional guidance – favorable to the HSA-  has arrived.

The new FSA $500 carry-over option fits nicely with a HSA. One can move from a full healthcare FSA to a new HSA without violating any IRS rules. Remember, you cannot have a full healthcare FSA and an HSA; the FSA must be limited to dental and vision only, or post-statutory deductible. The guidelines offer the following options:

  • An individual whose healthcare FSA has unused amounts may elect to carry over up to $500 of those funds into a limited purpose or post-deductible FSA, if the employer offers that option. These types of accounts are HSA-compatible, and would not interfere with HSA eligibility, allowing an individual to contribute to a HSA as well as to keep the unused FSA funds.
  • An employer can structure their benefit plan to automatically carry over up to $500 of unused healthcare FSA funds into a limited purpose or post-deductible FSA for individuals who choose an HSA-eligible high deductible health plan for a small additional fee. This also allows the employee eligibility to contribute to an HSA and to keep the unused FSA funds, with the benefit of requiring no action on the employee’s part.
  • An individual with unused healthcare FSA funds may also choose to forfeit those amounts. This will allow an individual with a very small healthcare FSA balance to become HSA-eligible, without any transition to a different type of account.
  • Any individual who is covered by a healthcare FSA, as a result of a carry-over of unused amounts from the prior year, and who does not elect to carry over into a limited purpose or post-deductible FSA, is ineligible to contribute to an HSA for the entire plan year, even if the carried over funds are exhausted before the end of the plan year.

Contact us with any questions, or phone 800.617.4729.

For Our Producer Partners: Early Bird FSA Offer – Respond by November 15, 2011

Your clients interested in adding Flexible Benefit Plans (FSAs) or switching administrators in January 2012 can take advantage of 25% off our initial set-up fees just by getting the completed FSA application and enrollment materials to Sterling Health Services Administration before November 15, 2011. Add COBRA administered by Sterling and we’ll take another 10% off the COBRA annual fee for our Standard services in the first year (annual COBRA renewal fees will not be discounted).

Sterling Health Services Administration offers Healthcare FSAs, Dependent Care FSAs, and Transit and Parking Benefits, as well as Premium Only Plans and Limited Purpose or Post Deductible FSAs to coordinate Healthcare FSAs with other plans. Our pricing is simple and there are no monthly minimums.

Our standard and optional COBRA services include installation and set-up, qualifying event, ongoing administration, and open enrollment support all for one simple price, making it easy to plan and budget.

Sterling is known for expert administration, knowledgeable sales and service staff, and a hands-on approach to help your clients. We’d be happy to provide client references.

Please contact your Sterling HSA sales representative today so we can help your clients save money tomorrow by taking advantage of this offer before November 15, 2011.

Contact us now.

What You Need to Know About Open Enrollment

Along with the return of school buses and shorter days, Fall is open enrollment time – the period in which you can sign up for, or adjust, your participation in your employee benefits package.

A recent study conducted by Harris Interactive and released as part of the Aflac WorkForces Report found that most workers regret their health benefit choices. The study reports that 77 percent of workers say they’ve made mistakes in their benefit decisions in the past, with 42 percent saying they waste money every year.

The most common mistakes include:

  • choosing the wrong deductible
  • not taking advantage of flexible spending accounts (FSAs)
  • passing on coverage — such as vision and dental care

What can you do to make the most of your benefits package?

  1. Visit the Consumer Reports Health website for information on how to choose a plan as well as what changes you should expect due to healthcare reform.
  2. If your employer offers an Flexible Spending Account, sign up for it. See below for more on FSAs.
  3. Make sure you put enough money in your FSA. According to the Aflac report, 43 percent of respondents said they didn’t contribute enough to the account.
  4. Visit the Sterling Resources page for links to companies we’ve partnered with in order to help you negotiate healthcare bills, find the best doctors and medical service providers, comparison shop for prescriptions, and more.
  5. Of course, the best resource during open enrollment is always your Human Resources department. They will have all the information that is specific to your particular benefit offerings.

About Flexible Spending Accounts (FSAs)

FSAs enable you to set aside pre-tax dollars to pay for qualified medical, dependent care, and commuter transportation expenses. Depending upon your tax-bracket, an FSA can save you up to 40% on items you already pay for out-of-pocket – such as co-pays for doctor visits, daycare tuition fees, and even gasoline for your “commuter highway vehicle” (better known as your car)!

Don’t forget that even if you’ve participated in an FSA in the past, you still have to re-enroll in these benefits each year, during open enrollment.

Sterling is led by experts in the health benefits and banking industries for one primary purpose – to put our customers in control of healthcare spending. Please contact us with any questions on Flexible Spending Accounts (FSAs), Health Savings Accounts (HSAs), Health Reimbursement Arrangements (HRAs), Premium Only Plans (POPs), or COBRA.