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 https://www.basiconline.com/solutions/Resources/proposal/