If you offer a High DeductibleHealth Plan (HDHP) with a Health Savings Account (HSA), a limited-purpose Flexible Spending Account (FSA) may be ideal. Got all those initials down? Good… lets see why:
Typically, an employee funding a Health Savings Account is doing so for one of two (or both) reasons:m To cover their medical expenses and/or to save for retirement. In these cases, they may be reluctant to use the HSA funds towards dental and vision expenses. The employer can set up an FSA that limits expenses to dental and vision. For the employee with big orthodontic bills on the horizon, this can save them thousands in taxes over the next several years.
You should be aware that this advantage my abe limited, as under Health Care Refom, the limit on all FSA’s will be $2,500 a year.