Flexible Spending Accounts (FSA)

Flexible Spending Accounts (FSAs), sometimes called Flexible Spending Arrangements, are based on a pre-set arrangement between an employee and their employer. This account type allows individuals to pay for any medical expenses that may arise with tax-free money. Generally, there are limits on how much money can be invested in an FSA, which is set by the employer. To learn more about flexible spending accounts or to request a free quote, contact Beckham Insurance Group today.

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Advantages of FSAs

FSAs provide employees and employers with many benefits, including:

Individuals May Be Able to Carry Money to the Next Year

Unlike other account types, flexible spending accounts allow individuals to carry money they have saved over to the next year. This allows individuals to save money from their plans that they haven’t used in the current year to pay for expenses in the next term without losing all of the money they’ve saved. The amount that can be carried over is generally limited to $500.

Individuals May Be Granted Extra Time to Spend Their FSA Money

In cases where employees are not able to hold a certain amount of saved cash in their FSA accounts over to the next year, employers may instead offer an alternative option. With this plan, employees are not permitted to hold money over, but they are granted an extra period of time in which they can spend any money saved from the previous plan year. Typically, this term is set at two and a half months. This can give employees the chance to use up the money they have worked hard to save instead of losing whatever amount remains.

Types of Flexible Spending Accounts

There are four different types of flexible spending accounts: health, dependent care assistance, individual premium reimbursement, and adoption assistance accounts. Here’s what you need to know:

Health Flexible Spending Account

This FSA type is the most common. It helps individuals cover medical, dental, and assorted vision expenses that may not be fully covered by their insurance plans. Usually, FSAs allow account holders to cover copays, deductibles, some prescription drugs, and necessary medical devices.

Dependent Care Assistance Account

This type of FSA allows individuals to cover the cost of daycare, after-school programs, elder care programs, and other qualifying programs geared toward aiding qualified dependents of the account holder.

Individual Premium Reimbursement Account

This type of FSA empowers employees who hold accounts to use pre-tax money they’ve earned to pay for medical premiums that are not employer-sponsored. This money can be used not just for the original account holder, but also for their spouses and eligible dependents.

Adoption Assistance Account

This type of FSA aids individuals in offsetting necessary expenses associated with the process of legally adopting eligible children. Generally, this means the child must be under the age of eighteen, or that they are unable to physically or mentally care for themselves. Surrogate arrangements and the fees associated with the adoption of stepchildren are not covered under this account type.

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Attract and retain top talent with a comprehensive benefits package, and reduce HR workload with a full suite of tools and services. At Beckham Insurance Group, we are here to help make planning and managing your employee benefits easier than ever. Get in touch today to learn more about Flexible Spending Accounts and our other benefits offerings!

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