Help Employees Determine the Right FSA Amount

FSA Contribution Advice

With open enrollment right around the corner, now is a good time to get employees thinking about their benefits. Among their choices will probably be a flexible spending account (FSA). Employees may know about the basics of how this benefit works, but need help determining how much money to deposit.

It’s important for employees to make the right contribution amount. If they don’t use all their contribution, they risk losing some of their funds and if they underestimate the amount they need, they miss out on the advantage of using pretax funds.

The FSA limit for 2017 is $2,600 or about $217 per month. The IRS should announce the new contribution limits for 2018 within the next couple of months.

Track Unreimbursed Expenses

As an employer, a first step is to suggest that employees consider or track for a few months their unreimbursed medical expenses. For example, they can do this in the months of September and October. If they average $200 or more each month, this demonstrates that during open enrollment in November they may be wise to choose the maximum FSA contribution amount for 2018.

Health Plan Deductibles

Employees taking advantage of a high deductible health plan will have at least a $1,350 individual deductible to meet or at least a $2,700 family deductible to meet in 2018. Clearly, employees with that family deductible might want to take advantage of maxing out their FSA.

If employees generally do not feel like they have a lot of unreimbursed healthcare expenses, they may want to just look at their dental and vision expenses in terms of a contribution amount. However, help workers think through their copays and coinsurance amounts for their share of prescription costs too. And before they set their final contribution, have them review their health plan’s summary of benefits information to note any differences from last year to this year so they can adjust their amount accordingly.

Additionally, provide some considerations for employees to increase their FSAs:

  • New baby
  • Family members with chronic medical conditions
  • Children in sports
  • Children with orthodontia needs
  • Moving to a high deductible health plan

Lastly, remind workers of additional qualified medical expenses that do not require a physician’s prescription:

  • Sunscreen
  • Topical pain therapies
  • Thermometers
  • Blood pressure monitors
  • Contact Lens Solution

Sources:  AP Financial News. How to choose the right amount for your FSA in 2017. 11.02.16 and Nerdwallet.

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