Overview of Flexible Spending AccountsMarch 26, 2012 — 1,690 views
Providing healthcare benefits to workers is a delicate process. It's important to strike a balance between pleasing workers with the services they're given and keeping overall costs low. One way to do this is by providing staff members with flexible spending accounts. These benefits, also known as FSAs, help to cover medical expenses and free all parties from restrictions on different kinds of procedures.
An FSA is essentially a savings account both employees and employers contribute to. Companies will usually put in a greater percentage than workers themselves, but there is no strictly defined model for how each party will add to the FSA. In fact, money can even be withdrawn from an account in excess of what is in there, so long as it is eventually paid back by either party and is used to pay for qualified medical expenses.
Another benefit of a flexible spending account is it reduces the tax burden for all parties involved. The contributions that go into an FSA are not taxed when they go into an account, and withdrawn funds do not need to be taxed either. The only real restrictions placed on FSAs involve when they must be used. There's no limit to how much money can be added to an FSA, but all contributions must be used by the end of the year. Otherwise, they're forfeited and can never again be reclaimed.