Maximize Tax Savings with FSAs and HSAs
What is an FSA?
A Flexible Spending Account (FSA) allows employees to set aside pre-tax dollars for eligible expenses.
If one expects to incur medical expenses or need childcare, taking advantage of FSA accounts can help save up to 30% on qualifying out-of-pocket expenses.
✅ Tax Savings – Contributions to an FSA are made pre-tax, reducing taxable income and saving employees money on eligible expenses. Employers also benefit from lower payroll taxes.
✅ Covers a Wide Range of Expenses – FSAs can be used for medical copays, prescriptions, dental treatments, eyeglasses, childcare costs, and more.
✅ Immediate Access to Funds – The full annual election amount for a Health FSA is available on day one of the plan year, helping employees cover unexpected healthcare costs.
✅ Employer Flexibility – Employers can offer a grace period or carryover option, allowing unused funds to roll over or be used beyond the plan year.
✅ Enhances Employee Benefits Package – FSAs boost employee satisfaction by providing financial relief on everyday healthcare and dependent care expenses.
By offering an FSA, businesses create a more competitive benefits package while helping employees save on essential expenses.
How does it work?
1. Employees choose annual contribution.
In 2025, the annual maximum contribution is $3,300.
2. Contribution is deducted pre-tax from each paycheck.
This lowers taxable income.
3. Employees swipe the FSA debit card to pay for eligible expenses.
They can also submit a claim for reimbursement.
What is an HSA?
A Health Savings Account (HSA) is a tax-advantaged savings account designed to help individuals with high-deductible health plans (HDHPs) save for medical expenses. Contributions to an HSA are tax-free, and funds can be used to pay for qualified medical expenses, including doctor visits, prescriptions, and certain medical procedures.
Key Benefits of an HSA:
- Tax Savings: Contributions are tax-deductible, and withdrawals for qualified expenses are tax-free.
- Rollover Funds: Unused funds roll over year to year, unlike Flexible Spending Accounts (FSAs).
- Investment Growth: Many HSAs offer investment options, allowing the balance to grow over time.
- Portability: Your HSA stays with you even if you change jobs or health plans.
To be eligible, you must be enrolled in an HSA-qualified high-deductible health plan (HDHP) and cannot be covered by another non-HDHP plan, Medicare, or claimed as a dependent on someone else’s tax return.
Would you like help comparing HSA providers or understanding how an HSA fits into your benefits strategy?
Eligible Expenses
Medical FSA or HSA:
Eligible expenses include: copays, deductibles, coinsurance, doctor visits, lab work, x-rays, dental work, vision exams, glasses, laser vision correction, physical therapy, chiropractic care, medical supplies, RX, etc.
Dependent Care FSA:
Eligible expenses include: before/after school care, daycare, nanny/au pair, nursery schools, preschools, late pick-up fees, summer or holiday day camps.
Benefits of Adding a Program
Adding HSA, HRA, FSA, DCA, and Commuter Benefits to your employee benefits package enhances workplace satisfaction, improves retention, and provides tax advantages for both employers and employees. These pre-tax benefits help reduce payroll taxes, lower healthcare costs, and support employees’ financial wellness by offering flexible savings options for medical, dependent care, and commuting expenses. A well-rounded benefits package positions your company as an attractive employer while promoting a healthier, more engaged workforce.
The information provided is for informative purposes only and is subject to change. For accurate benefit coverages and eligible expenses, contact Flex Facts directly. This pricing sheet and tax savings sample is intended to provide employers with a brief overview and is not intended to replace or serve as substitute for official invoices or unforeseen changes in tax rates. Please consult with Apex Benefit Group and your accountant prior to installing HSA, HRA, FSA, DCA, Commuter Benefits.
