What are the advantages of an FSA?
The biggest advantage is that the net cost of your required out-of-pocket healthcare and/or dependent care expenses is reduced and therefore healthcare and/or dependent care is made more affordable. The amount you contribute to your FSA (as well as the amount you are reimbursed from your health reimbursement arrangement, if applicable) is income tax-free. The amount you contribute to your FSA is not subject to federal, state, or Social Security (FICA) taxes. Generally, this means a savings of 15 to 40 percent, depending on your tax bracket. As a direct result of your personal tax savings, you will reduce the cost of your medical and/or dependent care expenses, and thus increase your expendable income.
