What is a Flexible Spending Account (FSA)?
FSA accounts are sponsored by your employer as an optional employee benefit and are regulated by the IRS. They are designed to help workers and their families pay for health care and/or dependent care by allowing the participant to use tax-free money for certain eligible expenses. Participants make pre-tax contributions by payroll deduction and the contributions are allocated to an account maintained on the participant’s behalf by the employer.
A Flexible Spending Account (FSA) is one type of Section 125 Plan you may want to consider implementing. Learn more in this small business video minute. With an FSA, your employees can elect to make pre-tax deductions for uninsured medical expenses not covered by your regular healthcare plan. If the employee does not spend the money in their FSA by year-end, you’ll retain the balance.
