Flexible Spending Account

jbduffy

We are a small-mid size sales service (rep agency) firm in PA that is considering implementing an FSA plan for medical and dependent care. This would be used to offset out of pocket costs for expenses not covered by our group health plan. We already have a Section125 for POP but would like to add the flexible spending to it. We are a 60 EE organization with little or no EE turnover. I am trying to figure out what maximum I should set for the medical deferral. We want to limit our risk. My question is: what amount per year do you allow your EE to defer into an FSA? What size organization are you? What % of EE take advantage or your FSA plan?

LindaS

At my current company, we do not have a limit on the medical deferral but at my former employer, it was $2,500.00 annually. As far as participation, we currently have about 30% that participate on some level. I have found that going over this information, in detail, as well as providing some examples really increases participation. I see alot of employees who start off "small" and increase their amounts each year.

Pearce

A lot will depend upon the make up of your employee population. We have approximately 1,200 employees across the US. Participation in the medical flexible spending account is between 20-25% annually and I would consider this the high end of normal participation in spending accounts. We allow employees to set aside up to $3,000 per calendar year. Average elected is $1,000.

Margaret Morford

Check the regs, but most companies have a low maximum contribution limit (regardless of what is allowed by law) because the employees can draw against the annual elected limit if they have bills to recover the money even before the money is deducted. The employer many times gets caught holding the bag when the employee terminates mid-year. You probably will want to designate a ceiling.

Margaret Morford
theHRedge
615-371-8200
[email]mmorford@mleesmith.com[/email]
[url]http://www.thehredge.net[/url]

AnneLa

We allow $2,000 per year and we have a relatively small amount of employees currently participating in the plan.

Hunter1

We've had a very good experience with our 125 plan. We set it up several years ago and have a $5000 limit (set when laser vision correction was in the $2000+ range per eye). We have 250 employees and have 164 of them in the medical account this year, 66%, and I am surprised we don't have more. I'd probably go with a lower limit if I was going to set the plan up today, but even at our limit, we have yet to have a year when we don't 'make' money with the plan with the tax savings and a few employees who leave money at the end of the year.

Dmurphy

We are a small (57 employees) organization. Our maximum medical reimbursement Flex contribution is $2600 per year and employees have to be here 12 months by January 1 to participate. Participation is 20-25%. In all the years we have had the plan (10+), we have had only one loss, which was <$500. We tried the Dependent Care for one or two years. Only one employee tried it and there were complications, so that was dropped.

Mentel

We have 85 employees. Our limit is $2000 per year. Participation is about 40%. We usually come out even for the year between money left in and early terminations.

JudyRoy

We started a FSA several years ago with 100 employees. Our limit at that time was $1500. We have since raised it to $4000 with 200+ employees. Have less than 10% participation. Never did have more than one or two take advantage of the dependent care; basically because of the "cash flow" problem. Many of our employees work two jobs just to make ends meet. Why more don't take advantage of the medical portion, I don't know, except I hear "I can't afford to have any deductions taken out of my check". Seems like the ones who need it the most, don't want it.