flexible spending accounts
A Health Flexible Spending Account (FSA) is a pre-tax benefit account in which employees put money into that can be used to pay for certain out-of-pocket health care costs, tax-free. A Dependent Care Flexible Spending Account (DCFSA) or dependent care reimbursement account, is a pretax benefit account used to pay for eligible dependent care services, such as child care, preschool, and before or after school programs.
benefit to employers
Reduces payroll taxes
Increases retention, reducing
Eases administration Improves morale
benefit to families
Improves health, through increased access to health care, including greater access to primary care, preventive screenings, ambulatory care, prescription medications, and chronic disease care; greater medication adherence; and higher rates of diagnosis
Improves work/life balance
Improves self-reported health
Improves family economic security
case study: Anderson Corporation
Tried-and-true FSA is a critical component of benefits
Dependent care flexible spending accounts (FSA) have been around for decades, and many employers offer them as part of their overall benefits. The FSA allows employees to set aside pretax money each month to cover eligible dependent care expenses for children under 13 years old. The expenses can include regular daycare costs, summer/day camps and babysitters. Employees with tax dependents of any age incapable of self-care may also qualify to use the benefit.
Tammy Parrucci, corporate benefits design manager at Andersen Corporation, said the availability of the FSA benefit extends well beyond her 21-year tenure at the company. While it may not be “new and shiny,” the dependent care FSA is a frequently used and oft-appreciated benefit, according to Parrucci.
“The dependent care FSA is low-hanging fruit when you’re creating programs to support employees with children, particularly in a competitive hiring environment,” said Parrucci. “At Andersen, our family-friendly benefits are quite extensive, and we see the tax advantage accounts as a critical component.”
When Parrucci started her benefits career, her first job was to process FSA reimbursements at Honeywell. Today, companies hire third party administrators or other vendors to administer the dependent care FSA and health care-related tax advantaged accounts. Smaller companies might work with brokers to facilitate this benefit. Andersen partners with Optum Bank.
The dependent care FSA is a benefit that provides a tax advantage to the employee and the employer. Parrucci called it “a win-win.” For the employee, taking out pre-tax money (up to $5,000 per Internal Revenue Service guidelines) lowers their taxable income; the company also receives tax benefits.
Parruci said that employees who participate truly appreciate the program. At any time, employees can download the app, see what’s in their account and submit their claim in real time. Some employees can even use a debit card, if their daycare provider accepts them. While the benefit is the same one Parrucci used when her kids were small, accessing it is so much easier with Optum Bank. As an innovative and industry-leading organization, Andersen remains committed to providing robust and inclusive benefits for all employees and their families.
Location: Bayport, Minn.
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