FSA companies: who administers a health FSA, and what the administration costs
- Benefits cost per employee a year
- $11,900
- Per employee a month
- $991.67
- As a percent of base salary
- 19.2
The numbers on this page come from the inputs you enter and the method stated: 3,600 seconds to an hour, 52 weeks to a year, twelve months to a year, and nothing else. No industry shrinkage figure, no occupancy benchmark and no assumption about your attrition; every one of those is yours to enter.
A flexible spending arrangement runs on employees' own pre-tax money, elected once a year and spent against rules they did not write, which makes it unusually easy to get wrong and unusually annoying when it goes wrong. FSA companies exist to run the mechanics: taking the elections, issuing the cards, checking what the money was spent on, and closing the year out. This page covers what the administration includes, how it is priced, the two design decisions that belong to the employer, and the questions that separate operators from portals.
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Elections, and the fact that they are annual and binding
An employee elects an amount for the plan year, and outside a permitted change in status that election stands. The administration has to capture it, apply it to payroll deductions correctly from the right date, and handle the mid-year changes that are actually allowed. Ask how a permitted change reaches payroll and how long it takes, because this is where the employee-facing complaints come from.
Substantiation, cards and the receipts nobody wants to read
Card spending has to be checked against what the arrangement permits, and the checking is the work. An administrator that issues cards and chases substantiation properly is doing the job; one that issues cards and leaves the year end reconciliation to you has handed back the difficult half. Ask what proportion of card transactions require a receipt in practice and who chases them.
Price it per participant per month and read the floor
The normal shape is a rate per participating employee per month with a monthly minimum, plus sometimes a charge for cards and a charge for year end. Work it out per participant at your own participation rate rather than at your headcount, because participation in a health FSA is usually well below headcount and the floor therefore bites earlier than the proposal implies.
Two design decisions that stay yours
Whether the arrangement offers a carryover or a grace period, and what the employer contributes if anything. Both are plan design with tax rules attached, both belong on the plan record beside the headcount and the budget, and neither should be decided by the firm you are about to pay to administer it. Settle them first, then shop.
Will it do what you need for FSA companies?
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FSA companies: common questions
What does an FSA administrator do that we cannot? Substantiate. Checking what card spending was for, against the arrangement's terms, means handling medical detail about colleagues, and that is the part an employer of any size struggles to do at arm's length. The elections and the payroll mechanics are the easier half.
How are FSA companies priced? Usually per participating employee per month with a monthly floor, sometimes with card and year end charges on top. Participation in a health FSA is normally well below headcount, so calculate the cost per actual participant, which is where the floor shows up.
What is the employer's own decision here? Whether to offer a carryover or a grace period, and whether the employer contributes. Those are design decisions with tax consequences and they belong on your plan record, not in a vendor's default settings.
Does Orgplanly administer an FSA? No. It keeps the plan the arrangement sits inside, so the administration fee and any employer contribution sit per employee beside the headcount they were planned for. It sees no elections and no receipts.
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