Medical and dental bills can be outrageous at times depending on the need. When you help your employees make the best of it, they’ll take the time needed to see it through. While offering medical and dental insurance is the best option, depending on the size of your company and the number of employees you have, that may not be feasible.
One way you can help your employees with the cost of medical and dental bills is to help them to understand and use a flexible spending account. There are two types of flexible spending accounts. One is specifically for daycare and the other is for healthcare.
The flexible spending account for daycare can be used for children and those that are not able to take care of themselves due to an injury or mental disability. This money is only allowed to be used for this type of service and the money must be pulled in a certain way or it can’t be used. You must pay for the services ahead of time and then produce a receipt showing payment and then you’ll be reimbursed.
The flexible spending account for healthcare must be used on healthcare expenses. This would include deductibles, amounts not paid by your insurance company, fees not allowed by your insurance company, prescriptions, and other fees associated with healthcare.
There are two important advantages and one important disadvantage to using these types of flexible spending accounts. Even though, they’re related, you must decide if the advantages outweigh the disadvantage.
The first advantage is the out of pocket fees you won’t have to pay. To get started with this type of account you’ll need to decide how much money you can afford to put into the account each month and then have it automatically deducted from your account and inserted into your flexible spending account. Once that’s done you’ll know how much you have to spend and you won’t worry when you go to the doctor because the money they’ll require will come from there.
The second advantage is the money put into this type of account is not taxes. It’s taken out before the taxes are taken out of your check, so you’re making more money than you would if taxes were taken out on all of the money in your check.
The disadvantage is you can’t claim the healthcare amounts on your income taxes which helps you to increase your return or help if you end up owing money. While it helps during the year, if you need more money at the end you’ll need to rethink this option.
Flexible spending accounts are helpful when you have healthcare fees to pay. It helps you to cover out of pocket fees that may be required at the time of service. This will help you to feel comfortable going to the doctor.