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Flexible Spending Accounts (FSAs) Flexible Spending Accounts are employee-owned accounts that use pre-tax dollars to pay for out-of-pocket medical and day care expenses. How is the account funded? The account is funded by pre-tax dollars the employee elects to have deducted from their paycheck in equal installments throughout the calendar year. This saves them money by reducing their taxable income. How does the spending account work? After out-of-pocket medical and day care related expenses are incurred a claim is submitted (or a debit card is used to pay for the expense) and reimbursed on a tax-free basis for those expenses. Are flexible spending accounts right for all employees? No. It’s important to estimate expenses carefully in advance of enrolling in a FSA. A medical FSA can help to reduce taxes and free up more after tax income by allowing employees to pay for unreimbursed or partially reimbursed medical, dental and vision expenses with pre-tax dollars. Medical FSAs may be the right choice for an employee if: • They regularly buy over the counter drugs and medications. • They regularly have out-of pocket expenses such as co-pays for prescription drugs and doctor visits. • They regularly incur expenses for non-covered items such as eyeglasses and contact lenses. Day care FSAs may be the right choice for an employee if: • They have day care expenses for a child under 13 years of age. • They pay for summer day camp and after-school care. • They pay for elder care. I need more information! How do I get answers to all my questions about flexible spending accounts? Contact Carl DeRiso now or call Carl DeRiso at: 1-866-693-7254 |
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