Benefits of FSA
FSA denotes flexible spending account, and it is a good employer sponsored benefit that gives workers the chance to cater for medical costs. This is a suitable alternative to health insurance schemes that may not cover all the medical emergencies. When you are dealing with medical payments not covered under your health coverage program, it is important to make use of your employer’s FSA.
1. Better medical insurance
The FSA offers a better and more flexible medical insurance option. When you have high medical bill and you do not have a medical insurance program, you can easily submit your request and evidence of recompense to the respective administrator. This grants you instant access to quality prescription medicines, medical services, laboratory fees and insurance premiums.
2. Lowers income taxes
FSA is an effective way of lessening your income taxes. This is because any money deposited in the FSA is usually deducted before the calculation of Federal or State taxes. Even though this reduces an employer’s monthly income, it increases their spendable income. Actually, one can save a lot of money when using a FSA.
3. Free to use
A law that was enacted in 2003 by President Bush stated that agencies and companies that were participation in FSA programs had to cater for all the administrative expenses for the enrolled employees. Hence, signing up for the FSA is free and will not cost an employee anything.
4. Tax benefits
Using the FSA is just the same as getting discounts whenever you purchase an item. It is financially sensible to always go for discounts as they help save money. In this regard, FSA offers the chance to utilize tax-free money.
Note that when the period of coverage in the FSA ends and the money has not been used up, it is regarded as taxable earnings. Hence, you should use the funds before the expiry of the insurance period.