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What is a FSA?
Flexible spending account (FSA) plans enable employees to set aside money,
on a pre-tax basis via salary reduction, to pay for certain expenses.
Two types of spending accounts are permitted under Section 125: health
care and day care.
Under a health care spending account, employees are reimbursed for eligible health care
expenses that are not covered or reimbursed under the employer's health plan.
Typically,
these include deductibles, co-payments and uninsured expenses, such as dental expenses,
eyeglasses or hearing exams.
Over the counter drugs and medications are also covered.
Under a day care spending account, employees can be reimbursed for qualified dependent
care expenses that are incurred so that they may continue to work instead of having
to provide the care themselves.
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