Human Resources Benefits Short Questions 2. Flexible Spending Accounts

Flexible Spending Accounts
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1. Briefly describe the pros and cons of Flexible Spending Accounts. Please be sure to take both the employer and employee perspective.
From the employer’s perspective, due to contributions to reimbursement accounts, employees’ taxable income is decreased. This results in decreased workers’ compensation, unemployment insurance, employer expenditure for FICA tax, and other wage-based expenses. A significant fraction of administration costs is counterbalanced by the FICA tax savings. Employees’ main area of concern is the “at risk” provision linked to health care reimbursement accounts. The “at risk” provision makes it mandatory for employers to reimburse employees for incurred eligible expenses. The employer is required to reimburse the full amount that the employee has reserved for the whole plan year regardless of the amount the employee has contributed up to that point.
From the employee’s perspective, when taxable income is decreased, their federal income tax, state income tax decrease, and FICA tax decrease. FSA reduce adjusted gross income, as such; it makes employees eligible for other beneficial tax benefits. If they have coverage, employers can use pre-tax dollars to reimburse employees for procedures that are not covered by their health care insurances, co-pays, out-of-pocket deductibles.
2. The new focus in HR is on Integrated Disability Management (IDM) Programs. By implementing such programs, employers are seeking cost savings and employee satisfaction. Discuss in detail the pros and cons of implementing an IDM program.
IDM programs help employers save money by eliminating redundant processes, reducing the amount of administrative time spent in overseeing multiple programs, applying early intervention programs, and facilitating earlier return to work. IDM programs also free up staff members to better manage employee processes. This results in improved reporting and tracking, increase morale, and better communication with employees. Employees also benefit from IDM programs. A simplified process alleviates much of the confusion and stress that comes with the process. IDM programs help managers clarify the limitations of disabled employees and work ...