Flex Spending Accounts
Flexible Spending Accounts (FSA) allow employees to set aside tax-preferred money each year to pay for qualified out-of-pocket medical expenses. Employees enjoy the security of knowing they will have cash set aside for routine healthcare costs, and save on income, Social Security, and Medicare taxes.
Under the Affordable Care Act (ACA) the FSA has been limited to a maximum of $2,650 a year. At that level, it has provided a much-needed tax break for families and a way to purchase vision, dental, and other related needs with tax-free dollars. Newly proposed laws hope to lift the $2,650 maximum and provide even more opportunities to purchase medical care with non-taxable money.
With an FSA, the employee determines how much of his or her paycheck the employer will withhold, and the employee is reimbursed from those funds for covered expenses. One caution: If the employee leaves money in the account at the end of the year, the money will be lost. Employers are wise to offer this popular benefit. Ask one of our licensed agents for details.