One potentially great tool for ministry employers to offer is a Flexible Spending Account (FSA). For these accounts, your employees choose to voluntarily withhold a portion of their salary and place it into an FSA. If you are careful to follow the rules of the IRS, the money placed in an FSA is not subject to income or employment taxes.
The money in the FSA can then be used to reimburse the employee for qualified medical expenses. What constitutes a qualified expense is specifically detailed by the IRS, but common expenses include co-payments, deductibles, prescription medications, dental care, vision care, and medical devices.
FSAs can be wonderful tools. But, as most things are with the IRS, the rules surrounding them can also be complex, and the plans must be administered. If you want to understand FSAs better, speak with your ministry’s health plan provider, or talk with your banker for more information that is specific to your situation. If you need additional information, contact our offices so our experienced legal team can assist you.