Why FSA Instead of HSA?

[Franz Kafka]

If you have an HSA and an FSA the FSA must be a limited benefit plan covering only vision & dental expenses.

That's the answer I was looking for. Thanks.

 

[somarco]

That's the answer I was looking for.

Took us a long time to get there.

 

[Franz Kafka]

Another issue for small groups with an FSA is the admin cost.
If you crunch the number sometimes its not worth paying for the FSA admin if you only have 3 out of 20 people taking.

What size is your group?

A small group - 5~10 participants maybe. Do they need a separate administrator for the plan (the current payroll service can't just add the darn thing?)

 

[somarco]

I can't imagine going to the trouble & expense of writing a vision/dental FSA plan for that small a group. Much easier just to fully insure it and be done with it.

 

[Franz Kafka]

I can't imagine going to the trouble & expense of writing a vision/dental FSA plan for that small a group. Much easier just to fully insure it and be done with it.

If that's the case, would establishing POP with HSA without FSA in a cafeteria plan make sense for a small group?

 

[somarco]

If it were me, on this size case I would write everything on a group basis and suggest the employer fund a portion of the HSA.

 

[bill3173]

FSA is a salary reduction. Unused benefit balances accrue to the employer at years end.

Using an FSA reduces payroll which in turn reduces FICA, FUTA, SUTA and WC premiums.

The employer loses those benefits with an HSA.

HRA can be but is usually not pre-funded while an HSA (at least in the employer setting) is usually pre-funded.

HSA-HRA-FSA Insurance Guide and Comparison Chart | Bene-Care Agency: Serving Rochester, Buffalo, Syracuse, and all of Upstate NY | Bene-Care Agency - Rochester, NY

If an employee leaves a job with an fsa balance, those funds are returned to the employer, correct?

Do you know how that is handled tax wise? I worked with several people recently who were kicked out of the same location with FSAS', and I know that they don't get any part of the balance, but based on what you just said regarding the tax deduction, how would that be handled tax wise for the employer.

I called for one of the guys to find out the status of his FSA, and they said that he "owed $$". Would that have been accurate?

He seemed to know what they were talking about, and I wasn't the agent, so we just got on with our business, just wondering.

 

[somarco]

an employee leaves a job with an fsa balance, those funds are returned to the employer, correct?

It is a forfeiture, just like end of the year forfeiture.

ow would that be handled tax wise for the employer.

Forfeitures are included in the employers gross revenues.

they said that he "owed $$". Would that have been accurate

?

Yes.

With the FSA you can actually create a situation where you (employee) owe the employer money if you leave prior to yrs end.

 

[stuy119]

With the FSA you can actually create a situation where you (employee) owe the employer money if you leave prior to yrs end.

I was under the impression that if the employee spends all of his money allotted in the FSA and leaves the company mid-year, that's the risk the employer takes by allowing the FSA deductions to be pre-tax and that he can't recover the money.

 

[JMO Fan]

Had FSA for years. Later I had HSA (used up). Back to FSA, but prefer HSA (not available to me now).