Benefits of Flexible Spending Account
Popularly known as a reimbursement or flex plan, a flexible spending account is a great employer sponsored perks that give you the opportunity to pay medical expenses. You can also check similar accounts designed for dependent expenses. When you have medical payments that are not covered by your health insurance scheme, it is prudent to use your employer’s flexible spending account.
1. Reduces income taxes
A flexible savings account is a great way to reduce your monthly income taxes. Any money you deposit in a FSA is deducted before your State or Federal taxes are calculated. This way, your monthly income will be significantly reduced and your spendable income will increase. In fact, you can end up saving hundreds of dollars.
2. Flexible medical coverage
In case you have medical payments and yet you don’t have an insurance plan, you can submit your query and proof of compensation to the administrator. This gives you immediate access for quality medical services, prescription drugs and medicines, laboratory fees, insurance premiums, and insulin.
Using a flexible spending account is similar to getting discounts when you buy something ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ not because your expenses are trivial, but because it makes financial sense to use money that is tax-free. In fact, a flexible spending account can help reimburse for eligible health care expenses.
4. Dependent expense account
This account can help you meet employment-day care payments. Participating is such a plan is availably only when the year starts, or when you make your first contribution. When the employee decides to quit or is terminated, the money doesn’t have to be reimbursed.
When the coverage period ends and money is left unused, it is automatically classified as taxable income. In other words, you have to use the money before the coverage period expires. When the money is forfeited, you have to pay the taxes as required.