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I'm really REALLY interested in opening an FSA. I've asked my employer and they say they don't offer it. We have insurance through them with BCBSGA. It isn't a HSA qualified plan. So is there a way to have an FSA without my employer offering it?

If not, is there anything I can do to request they offer one? Like, how would it benefit my employer? How would it work against them? etc. Thanks!

4

Unfortunately, no. An FSA is exclusively an employer-established plan. Even self-employed people aren't eligible for an FSA.

From IRS Publication 969:

Qualifying for an FSA

Health FSAs are employer-established benefit plans. These may be offered in conjunction with other employer-provided benefits as part of a cafeteria plan. Employers have complete flexibility to offer various combinations of benefits in designing their plan.

Self-employed persons are not eligible for an FSA.

If I were you, instead of pushing for an FSA, I would ask for an HSA-qualified health plan (a High Deductible Health Plan, or HDHP) and an HSA. This has the potential to save the employer money, and an HSA does not have the use-it-or-lose-it rule that FSAs have.

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  • Thanks! I really think they'd like the idea of a high deductible plan because it'd save them a ton of money. I don't know why they didn't opt for one this past time. But the next time they discuss insurance I'm going to bring up HRA and FSA. – elfshadowreaper Apr 24 '15 at 19:38
  • @elfshadowreaper You're welcome. Just to be clear, the HSA, HRA, and FSA are three different things, and all are discussed in Publication 969. – Ben Miller - Remember Monica Apr 24 '15 at 20:05
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Answering the second half of your question - how can you convince your employer to set one up:

FSAs don't exactly have a direct benefit to the employer - they don't get a tax break for having one, at least as far as I've seen. However, they have a number of indirect benefits - and even a tax-related one.

  • Like other benefits, an FSA is an employee benefit that some specifically look for in an employer; it saves significant amounts for those with predictable health expenses (or children...). Some potential employees may choose to work for a company based on whether it offers an FSA.
  • An FSA is not free to offer (as there are administrative fees), but it does not otherwise cost money for an employer - there is no employer contribution portion for the FSA.
  • In addition to healthcare FSAs, there is also dependent care FSA and transportation FSAs which are also significantly beneficial to users. Typically all three are offered at once by one benefits management company.
  • An FSA may encourage employees to utilize healthcare resources, which may lead to healthier employees.
  • In addition to the more intangible benefits above, there is a direct fiscal benefit: FSA contributions are exempt from FICA/Social Security/Medicare taxes, which may save significant amounts for the employer.

If it were me, I'd go to the HR department and ask if there is a particular method for making such a suggestion. For most companies there is a particular timeframe where benefits are considered, and it might be possible to present to that committee or even to join the committee (depending on your stature and the size of the company).

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    I'm definitely going to suggest an HRA or an FSA when I hear they're discussing health insurance. I'm a manager at the company I work at so I hear when things like that are approaching. We don't really have a good channel for comments/concerns, at least not anonymous ones. – elfshadowreaper Apr 24 '15 at 19:37
  • There can be expense as I understand for the employer when employees leave. When you elect to put say $2000 into your FSA, you have access to that full sum on Jan 1. If you use it immediately, then leave the company, they are on the hook for the amount you have not yet contributed. Though I believe it works in the opposite direction: what you don't use, they keep. Your company may not want to assume the potential risk. – Brett McCann Apr 24 '15 at 21:22
  • Does the employer assume that risk, or the plan itself (paying it out of leftover funds not used within the year under use-it-or-lose-it, presumably)? – Joe Apr 24 '15 at 21:30
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Noooooo don't ask for an HSA. All that's doing is taking money away from you and putting more in the employer's pocket. FSA is what you want. HDHP's are awful... it's basically insurance that takes your money and then never actually pays anything. It's like having no insurance at all and just using a discount card. If a family member gets sick you'll rack up $11K in medical bills in a month, all out of pocket, due in full in 90 days, and that's enough to force most 5-figure income families into bankruptcy. I'd avoid those HDHP/HSA plans like the plague. If your employer doesn't care enough about the employees to bother with an FSA, then switch to a different employer. In the current job market it's a piece of cake to switch.

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    This is completely false. I have a HDHP and an HSA and the savings in premium more than make up for the additional deductible. One drawback of the FSA is that is must all be spent by the end of the year or it is forfeited. – D Stanley Sep 27 '18 at 21:33

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