Health Flexible Spending Account (FSA)
A Health Flexible Spending Accounts allow employees to use pre-tax dollars to pay for medical bills not covered by their insurance. The Health FSA is covered by a separate Plan Document. The Health FSA plans can also be offered in conjunction with a POP and/or a Dependent Care FSA. The FSA is a budgeting tool that can help take care of out-of-pocket expenses such as dental and optical care, insurance deductibles, co-pays, and prescription drugs. Like a POP, the FSA helps pay for itself by increasing employee take-home pay while decreasing employer payroll taxes.
Here's how it works:
An employee decides how much of their salary should be set aside before taxes are calculated.
This amount is automatically deducted from their paycheck every pay period, just like any other payroll deduction, and is deposited into their Health FSA account.
The employees would pay their out-of-pocket expenses up-front, then submit a claim and documentation and a reimbursement is made from their own account.
Out-of-pocket expenses include:
Eyeglasses and contact lenses
Medical insurance deductibles
X-ray and laboratory services
The flexibility of an FSA plan makes it the best option for small to medium sized businesses.
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