A Flexible Spending Account is a low cost way for you to enhance your employee benefits package by providing your employees reduced federal income taxes, social security taxes, and state income taxes. It also allows your employees to better budget for known out-of-pocket expenses over a twelve month period.
Flexible Spending Accounts – Health Care Account: Employees may set aside a portion of their salary through pre-tax payroll deduction to pay for medical, dental or vision care expenses for the employee, their spouse and dependents who are not covered by any other insurance plan. These dollars go into a health care spending account, and as expenses are incurred, employees can file a claim against their account and withdraw money to pay the expenses. Examples of such expenses include deductibles and co-payments, the cost of prescription drugs, vision care (including eyeglasses and contact lenses), dental care and orthodontia not covered by your group health or dental plans.
Flexible Spending Accounts – Dependent Care Account: Employees (and their spouses, if married) who have children and have to pay someone to watch the children so they can work, look for work, or attend school full-time, can elect to set aside a portion of their salary through pre-tax payroll deduction to pay for those expenses. These dollars go into a dependent care spending account, and as expenses for daycare or babysitting are incurred, employees can file a claim against their account and withdraw money to pay the expenses.