Flexible Spending Accounts
Employers often choose to implement Flexible Spending Accounts
(FSAs) to help employees save substantial tax dollars and for their
own tax-saving benefits as well. Although the savings vary,
- Realize FICA and FUTA savings with salary reduction
- Save under state unemployment insurance (SUI) and workers’
- Increase employee awareness of benefit costs
- Contain health care costs
In addition, these plans allow employees to:
- Pay for eligible expenses with pre-tax dollars
- Lower taxes, increasing take-home pay
The most common type of FSA is used to pay for zmedical and dental
expenses not paid for by insurance (copayments, deductibles,
prescriptions, etc). Funds set aside are easily accessible by paying
for FSA-eligible expenses with a Debit Card at the point of sale.
Dependent Care FSA
FSAs can also be established to pay for certain expenses to care for
dependents claimed on an employee’s federal tax return.
Employees can use tax-free funds to pay for preschool, summer day
camp, before- and after-school programs, and daycare for children
or elderly dependents.