Section 125 Plan > Employer Benefits

What benefits can an employer include in an FSA Plan?

  • Plan 1 - Employee-paid insurance premiums -- Payroll-deducted health insurance plan premiums and other employer-sponsored insurance coverages, including dental, disability, accident and group-term life insurance premiums.
  • Plan 2 - Medical expenses not covered by insurance -- Typical expenses include eye exams, eyeglasses, eye surgery, contact lenses and solutions, dental visits, orthodontic care, medical examinations, mental healthcare, chiropractic services, prescription drugs, insurance co-pays and deductibles and expenses that are not reimbursed by health insurance.
  • Plan 3 - Adult and child daycare expenses -- The cost to care for a dependent while the employee and spouse (if married) works.

Your company will recognize the following savings with an FSA Plan:

  • You'll save 8% or more on every dollar your employees redirect to the FSA Plan. That's because social security taxes will not be owed on amounts contributed to the plan by participating employees. (This is true of employees earning less than the maximum amount taxed for social security.)
  • Insurance premiums may be reduced for coverages that are based on employees' taxable salaries.
  • Your company's retirement plan expenses may also be reduced, since profit sharing and pension plans may be based on employees' taxable salaries.
  • Your company's health insurance cost can be lowered by combining certain changes to your insurance plan with the installation of an FSA Plan.
  • Because of significant cost increases for health insurance and other fringe benefits, many companies would like to change or reduce the insurance coverage they provide to their employees. An FSA Plan can be implemented at the same time a change is made, and thus significantly reduce the impact of the change on the employee.
  • You can increase your employees' share of insurance premiums without reducing their take-home pay.
  • Administrative costs are tax deductible and can be paid by you, your employees or a combination of employer/participant dollars. Fees can be collected by payroll deduction on a pre-tax basis.