Companies have to get more creative and aggressive in today’s job market to attract and retain talent. Flexible spending accounts (FSAs) and health savings accounts (HSAs) are two ways to stay competitive when it comes to this challenge. The great news is that these types of benefits offer tax advantages to both employers and employees, making FSA and HSA benefits a win-win. Here are some things to know about these specialized small business employee benefits.
Designing a Great Benefits Package
A benefits package relates to creating a work culture that cares about employees’ health and financial well-being. Paying a salary and withholding Social Security and Medicare just isn’t enough to attract today’s top talent. A great benefits package is a way to ensure that great employees will want to work at your company — and stay there for years to come.
Benefits related to healthcare are often at the top of employees’ lists when it comes to employer offerings. Retirement accounts and tuition and student loan assistance are also popular, particularly with GenZ and millennial workers. Many employers also like to offer what are considered “fringe” benefits, which can include things like gym memberships, public transportation passes, or even pet insurance.
While health insurance is definitely an important piece of the puzzle, some employers overlook the flexibility and benefits that HSAs and FSAs can offer.
HSAs and FSAs Defined
Health savings accounts and flexible spending accounts are tools that can offer great advantages to an employee’s health and financial well-being. They also offer advantages to employers in the form of tax savings. There are a few differences between the two types of accounts.
Health Savings Accounts:
HSAs are savings accounts that both the employee and employer can contribute to. The funds can later be used to pay for qualified medical expenses. Any money paid into an HSA is tax-deductible for both the employee and the employer.
The nice thing about HSAs is that they don’t have a “use it or lose it” aspect to them. The money rolls over every year, which presents the opportunity for the employee to build up a nest egg for future healthcare expenses.
A health savings account is available for employees who are covered by a high-deductible health plan (HDHP). Withdrawals from an HSA are tax-free for the employee. An HSA is also portable because it is owned by the employee.
Flexible Spending Accounts:
FSAs are similar to HSAs in that they are funded by pre-tax dollars. The money can be used for qualified medical expenses or dependent care, such as childcare or eldercare. Any funds paid into an FSA generally have to be used that same year. There is a carry-over provision that employers can take advantage of though, which allows the employee to roll over up to $500 to the following year, which does not affect the new year’s plan limit.
Maximizing Employee Benefits with HSAs and FSAs
Properly integrating HSAs and FSAs into your employee benefits package can be a complicated process. Managing these accounts properly can also be burdensome to your payroll and HR staff.
This is why ASAP Payroll offers employee benefit administration to our clients. By outsourcing benefits management to us, all of your benefit plans can be consolidated in one central location. Employees have full access to their benefits, which provides transparency and empowers your workers.
Allowing us to manage your employee benefits administration saves your HR team valuable time that can be spent on other tasks. Constant data entry is eliminated with our assistance, which reduces the risk of human error and makes compliance easier.
Achieve Greater Employee Benefits Satisfaction with ASAP Payroll
Health savings accounts and flexible savings accounts offer tax advantages to both employers and employees. Your workers will also have greater control over their healthcare spending if they take advantage of these plans. Contact ASAP Payroll today to learn how to implement FSAs and HSAs in your benefits package.
