FSA Enrollment: Employer FAQs Explained

Health insurance is confusing, for the employer and employee. Here are some FSA enrollment FAQs explained to ensure a smooth enrollment process.

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FSA enrollment can be a stressful period for both employers and employees, especially when it comes to changes in eligibility. The good news is that, with a little information and knowledge, employers can be readily prepared for FSA enrollment. Here, we answer the most important questions regarding this topic.

Can You Sign up for an FSA Mid-Year?

Normally, employees must enroll in an FSA during the open enrollment period. This is because it ensures that employers know how much to allocate for these accounts at the beginning of the year, as they play an important role in overall employee accounting.

However, certain life events might enable someone for FSA enrollment outside of the normal enrollment period. Getting married, experiencing the loss of a spouse to death or illness, or going through a divorce all qualify as changes in marital status. Moreover, having a baby might change the number of dependents that you have, which is also a significant change to your healthcare eligibility. Most things that can change someone’s health care eligibility allow them to enroll in an FSA mid-year, with a few exceptions.

How Does a Flexible Spending Account Work?

A flexible spending account is another way that employers can assist employees with healthcare, without enrolling them in a traditional group healthcare plan. An FSA helps pay for things that are essential to someone’s overall health and wellbeing. You can also use certain FSAs for dependent care.

What Items are Eligible for a Flex Spending Account?

Most general healthcare accessories and tools are covered by the FSA. For example, things required for vision such as eye exams, glasses, and contact lenses will always be covered. Seeing eye dogs, hearing aids, braille books, and items for the sight and hearing-impaired are also crucial. If you have experienced an accident or a surgery, you can use an FSA to cover crutches, wheelchairs, bandages, children’s first aid, bandages, heat wraps, walking aids and more. Certain over the counter medications may also be eligible with a prescription. These include antacids, allergy medicines, cough medicine, nasal spray, sleep aids and more– check out our 49 surprisingly eligible healthcare expenses.

What About the Employer vs Employee Contribution?

Standalone FSAs, such as those that aren’t accompanied by a major health plan, can only provide limited vision and dental benefits to employees. Moreover, employers are allowed to contribute $500 to the FSA as a limit. Or, regarding the employee’s salary reduction contribution, they can offer a dollar-for-dollar match.

Can You Lose the Money in a Flexible Spending Account?

Many people wonder whether or not signing up for an FSA plan will cause them to lose money. Here’s the thing: new FSA rules allow employees to set aside up to $2,600 per year for their FSA, yet they don’t have to meet this requirement fully. Moreover, only $500 of leftover money can be rolled over to the next year. If you have $1000 left in your FSA, for example, you’ll lose half of that because you can only carry over the $500. This is why it’s so important to calculate your contributions correctly at the beginning of the year.

This article was originally published in November 2018. 
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