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Flexible Spending Accounts (FSAs)

PBA clients can add a Flexible Spending Account (FSA) to a benefits program with an optional rollover or grace period to help members offset the high price of healthcare by allowing them to pay for copays, deductibles, and qualified out-of-pocket expenses with pretax funds. Because FSAs are only accessible through an employer, they are a popular addition to your employee benefits package.

PBA makes it easy to get FSAs set up and we manage everything for you.

What Is an FSA and How Does It Work?

Employees sign up for FSAs during your company's open enrollment period and choose how much they want to contribute up to the maximum allowable amount. Contributions are made via equal and periodic salary deductions from the employee's gross pay, which reduces their taxable income for the year. Depending on an employee's tax bracket, they can save up to 30% on allowable healthcare costs. Monies in an FSA are used to cover qualifying healthcare costs with claims submitted directly to PBA.

Different Types of Flexible Spending Accounts

Flexible Spending Accounts are available in various niches. PBA offers three distinct types of FSAs.

Healthcare FSA

Are the most common FSAs and allow employees to use funds for eligible medical expenses including dental and vision. They can also pay for deductibles, copays, prescription drugs, medical equipment, and many other medical expenses. Employees can cover healthcare costs for themselves, their spouse, and any dependents they claim on their tax return. In 2022, the contribution amount for healthcare FSAs is limited to $2,850 per employee. Healthcare FSAs can offer a rollover or a grace period.

Dependent Care FSA

Are another common FSA and intended for working parents and caregivers who pay for dependent care of children or physically or mentally disabled adults while they're at work. Single employees can set aside up to $2,500 and married couples filing jointly can set aside up to $5,000 if they have separate accounts. Dependent Care FSAs can't have a rollover option but may have a grace period.

Parking & Transit FSA

Are key FSAs that cover qualifying costs of commuting to work, such as the costs of using a commuter highway vehicle or mass transit expenses on a subway, bus, or train. They also cover eligible workplace parking costs, such as costs of parking at or near worksites, or at or near access to mass transit or commuter stops. Unlike other FSAs, Parking & Transit FSAs don't have a use-it or lose-it provision. Any amount an employee doesn't use is automatically rolled over to the next benefit year.

Grace Periods & Rollovers

Grace periods and rollovers help protect leftover funds, but they work very differently. Employers don't have to offer either one but often do as an additional perk to their employees. However, they can offer either a grace period or a rollover; they can't offer both.

Grace Period

At the end of a plan year the IRS allows grade periods of up to 2.5 months to spend leftover FSA dollars in the new plan year. However, employers decide on the length of the grace period. Clients can choose a shorter time frame to spend remaining FSA funds but not a longer one. At the end of the grace period any remaining funds are lost.

Rollover

At the end of a plan year employers can choose to allow employees to roll over up to $570 of healthcare FSA dollars to use in the next plan year. Any amount above this limit is lost. However, the $570 rollover doesn't count towards the contribution maximum for the new year. Employees can potentially have more than the set maximum in their FSAs to spend throughout the year.

PBA Makes It Easy to Manage FSA Accounts

PBA ensures employees get the most out of their FSA accounts and makes managing them easy for our clients. As your TPA, we help employees set up their FSAs and ensure they understand how to use them. Employees are given member debit cards that they can swipe to pay for covered services. They also have a dedicated FSA mobile app that allows them to access their accounts, view balances, and submit claims on the go. Access to the FSA portal is directly integrated with the employee benefits portal. PBA tracks claims as employees use their accounts and answer any questions that might arise. We also help clients make changes so their FSA accounts continue to meet everyone's needs.