Flexible Spending Account Summary

FSA's represent a fantastic way for employers to supplement employees existing health coverage and providing them with the facility to cover additional medical expenses. When an employee or organization participates in a flexible spending account program, they are essentially putting money aside on a pre-tax basis that will allow them to cover any medical expenses for them or their family.

From a compensation standpoint , these accounts leverage the fact that the funds are deposited without being subject to federal tax, pre-Social Security tax and even pre-Medicare tax. In some states the individualized state income tax is also waived. This translated into fantastic benefits for anyone utilizing this this service as anything they purchase with these funds is essentially discounted between 20 to 40%.

While these flexible spending account eligible expenses can range from anything related to medical services or even allergy medicines and antacids, it will be important for any individual under these programs to fully read and understand the rules that govern eligible expenses. This includes the dependent care FSA rules that must be understood as well.

FSA Eligible Expenses

Typically anything that is utilized to treat the relief from medical conditions can be reimbursed. Often times employees will utilize these services as an opportunity for them to contribute towards smoking cessation programs and even assist with certain diagnostic tests that can be increasingly expensive. If you couple the cost savings that you are receiving by utilizing this IRS approved pre-tax funds, you truly are saving a great deal through this program.

Over the course of the years we have seen changes in eligible expenses in addition to dependent care rules that have generally benefited account holders. With the improvements and refinements of these regulations, it has greatly simplified the process of utilizing these options to cover medical expenses.

Some plan providers have even offered debit cards with the direct link to the funds available in the account for the individual. All the employee needs to do is present the card at time of purchase and the money will be withdrawn directly from the FSA account.

FSA as a Viable Option

So with flexible spending accounts now a viable option for many organizations, companies will continue to seek these options to save employees and employers’ money, while offering them a huge selection of everyday over-the-counter products in addition to prescription medications and at a fantastic discount.

With an ever-growing list of flexible spending account eligible expenses, it is only a matter of time before every known medical product and service will be, some way, positively impacted by the use of these accounts. Regardless of the industry (whether medical, dental or vision), saving 40% off of your purchases and being able to utilize an easy system that incorporates your own personalized debit card will be an option that many employees will come to expect from their employers.

While there are rules governing the use of these options, it is always important that anyone under this type of benefit plans fully familiarize themselves with what they can and cannot purchase with these funds.