Tax Savings for Employers from Flexible Spending Accounts

Published October 2009

Flexible Spending Accounts are an additional benefit provided by employers for employees to cover the costs of medical expenses that are not reimbursed by insurance. In addition to being a great benefit for employees, an FSA plan can also produce cost savings for the employer as well.

Ever heard of a benefit plan that saves you money? Every dollar committed to an FSA plan saves the employer the matching Social Security and Medicare tax (7.65%). Depending on participation and election amounts clients can yield more dollars in tax savings than the fees they paid to administer the FSA plan.

Here are some examples of BASIC clients experiencing positive cash flows from their participation level and resulting tax savings.

Number of Participants Employee Contributions ($) Employer FICA Savings ($)
5 8,800 850
10 17,500 1,300
12 26,000 2,000
23 33,000 2,600
41 53,000 3,700
51 58,600 4,500
89 135,000 10,500
151 211,000 16,500
231 331,000 25,500
448 739,000 57,000


You can achieve larger tax savings by increasing participation as well as the average election per participant. BASIC offers a variety of methods of education for this purpose. Contact us today to discuss your options.

Call 800-444-1922 ext. 3 to be put in touch with a consultant in your area. Or you can request a proposal at this webpage