Attention Health Care Shoppers: Get Wise and Save Up to 30 Percent in 2008 with an FSA
Ceridian details savings employees can realize by taking advantage of flexible spending accounts (FSAs); offers tips for efficiently managing FSAs
MINNEAPOLIS (October 30, 2007) – Are you enrolled in an FSA? If not, did you know you are ignoring the opportunity to save up to 30 percent on health care expenses? According to Ceridian Benefits Services, a leading provider of comprehensive benefits and administrative services to employers, less than 20 percent of all employees offered Flexible Spending Accounts (FSAs) in the U.S. enroll and take advantage of their tax-savings benefits.
“Every year, employees leave millions of dollars on the table by failing to participate in FSAs,” said Ceridian Benefits Services Senior Vice President John Shade. “Interestingly, enrolling in an FSA is the one simple thing people can do – short of a lifestyle change – to reduce their annual out-of-pocket health care costs.”
Individuals are faced with thousands of dollars every year in out-of-pocket medical expenses. FSAs allow participants to plan for and save on these expenses by depositing a certain amount of their paychecks into an account every month, and receiving a tax-free reimbursement each time they incur an eligible expense. Because FSAs are exempt from federal income taxes, Social Security (FICA) taxes and, in most cases, state income taxes, they provide significant annual savings.
For example, an employee who makes $50,000 per year; pays the 25 percent marginal federal income tax rate and a 7.5 percent state income tax; and spends $2,400 per year on uninsured medical expenses will save more than $918 per year by participating in an FSA.
Employees may also have the opportunity to enroll in a dependent care FSA, which can reimburse up to $5,000 of day care and elder care costs for plan participants who work.
“Think of it this way: if your mechanic offered you 30 percent savings on your routine 2008 car maintenance, would you pass it up?” Shade added. “We strongly encourage those concerned about rising costs to enroll in an FSA and those who have already enlisted to take a few simple steps to maximize their savings.”
Shade offers the following tips for effectively managing a flexible spending account:
* Know What’s Available – Ask your employer about your company’s health care and/or dependent care FSA options.
* Estimate Your Expenditures – Use an FSA calculator to effectively determine how much to contribute to your account. Visit the Ceridian FSA calculator here to determine how much to contribute.
* Get Organized – Designate a folder at home or work for any paper receipts.
* Go Paperless – Some employers’ FSA plans let you pay for eligible expenses with a special debit card, providing you with direct access to your FSA account, less paperwork and immediate reimbursements.
* Monitor Your Account Online – Keep track of your FSA account online with your FSA plan provider.
Ceridian also encourages employers to get involved. “FSAs are most successful when employers proactively communicate to their employees the benefits of enrollment,” Shade said. “In doing so, employers are not only fattening their employees’ pocket books, they are encouraging employees to take stock of their future health care needs, which fosters an environment that leads to healthy, more productive workers.”
Source: Ceridian
