FSA Administration with Debit Card

Flexible Spending Plans are quickly becoming the most popular fringe benefit being offered to employees today. It is an easy and affordable way for your employees to contribute pre-tax dollars toward health and dependent care expenses while providing tax savings to your company.

Some of the highlights are;

1. A Flexible Spending Plan helps attract and maintain good employees.
   
   
2. The company can help employees reduce their tax liability significantly with a Flexible Spending Plan. Employees can save on Federal, state, local and Social Security Tax.
   
   
3. An employer can also recognize significant tax savings. Social security taxes will be avoided on the amounts redirected by the participants to the FSA plan. Insurance premiums may be reduced for coverage’s, such as worker’s compensation and disability insurance, that are based on the employees’ taxable salaries.
   
   
4. A Flexible Spending Plan does not require a change in already established fringe benefits.
   
   
5. An Employer that needs changes to the existing health plan due to rising costs and premium can offset some of the impact of those changes by providing tax savings to his/her employees with a FSA plan.

A FSA plan is easy to implement. With CBC, you will receive;

• Help designing a plan suitable to the Employer/Employee group
• An employee brochure that answers the most commonly asked questions
• All of the necessary enrollment forms and claims forms
• Quarterly statements for the individual employee as well as a summary for the employer group
• Easy to use Web based enrollment
• Access to claims status via customer service or the web
• A Mastercard branded Debit Card that is linked directly to an employees FSA account, eliminating the need to submit a reimbursement form.
• A worksheet to help employees determine the election amount appropriate for them.
  

The following example illustrates the savings to one employer.

The owner of AAA Manufacturing Company has implemented a Flexible Spending Plan for his employees.  Thirty employees participate in the plan, and they each elect to reduce their compensation by $2,000 a year to pay for day care, health insurance premiums, and other medical expenses.  Here is how the employer saves:

Annual salary reduction $60,000
(30 employees x $2,000 per employee)

FICA saved ($60,000 x 7.65%) $  4,590

Estimate other savings @ 3%
- Unemployment taxes
- Insurance premiums based on compensation $  1,800

Interest income earned on Flexible Spending Plan account balance
(assume average balance of $5,000 x 65) $     300

Total benefit to the employer $  6,690