Flexible Spending Account Alluring Desires In A $1.00

What is it about the flexible spending account that is so alluring to the desires found in a $1.00?

Is the flexible spending account geared toward young American families, or would it benefit every family?

Are you one of the many Americans who is running feverishly after the unknown secrets of the flexible spending account? Is the flexible spending account so alluring to your desires that you are willing to take a chance of losing hundreds of dollars to gain $1.00?

In this article we investigate the flexible spending account, its accessibility and purpose.

What is a flexible spending account?

A flexible spending account is an account setup between your and your employer. The accounts give you the ability to use pre-taxed dollars to pay medical bills. These accounts are usually offered when an individual needs additional health insurance.

In addition, the flexible spending accounts (FSAs) are considered to be an employee benefit, and solely designed to save employees money through pre-tax savings on healthcare expenses and child care expenses. They are also an employer benefit because they lower the business payroll and FICA taxes.

Accordingly, some employees appreciate the ability to use pre-tax dollars for health, dental, vision and prescription expenses.

Flexible spending account dollars at work

How does a does a flexible spending account work?

The two different types of flexible spending accounts are a medical and childcare. Both accounts have limits to the amount of pre-taxed dollars an individual can save each year.

You can request or setup a flexible spending account by speaking to your human resources administrator to determine if they offer the accounts. Some employers do not offer the accounts because of the number of risk factors they involve.

Flexible Spending Account Alluring Desires for Dollars

What are the employee and employer risks to contributing to a flexible spending account?

You may how can this account be risky it is between my employer, the federal government and myself. Nonetheless, there are some risks that both you and the employer take when setting up a flexible spending account.

The FSA writers stated that these are a few EMPLOYEE risks that you should consider before signing your name on the dotted line.

The Yearly Use or Lose It Rule: If you do not use all of your employee contributions and subject to an annual “use-it-or-lose-it rule.
Contributions must be made for the entire year, and the amount must remain consistent.
You are not guaranteed a refund on an over payment of contributions.

Just as the employees have risks so do the employer. These are a few of the risk that your EMPLOYER may consider before offering you the benefit of a flexible spending account.

The Uniform Coverage Rule: This rules requires the employer to reimburse the full annual election of contributions even if their full contribution were not made in advance.

Uniform Coverage Rule Coverage: This part of the rules may not be beneficial because the account does not have the funds to cover the annual reimbursement.

Employee Early Resignation: If the employee leaves the company before they have fully contributed to the flexible spending account, the employer is responsible for the full reimbursement of the money.

Just as flexible spending accounts have risks, they also have benefits for both the employees and employers. Currently there is no federal or state mandate that requires an employer to offer a flexible spending account there is at least one advantage. The advantage is that the employer is the savings on payroll and FICA taxes.

flexible spending account benefits administrator and the plan document

Who is the flexible benefits administrator? How does the flexible spending account include the IRS?

When a flexible spending account is opened it is the responsibility of the employer to ensure that all required documentation to sent to the IRS. Employers must remember that flexible spending accounts are governed by the internal revenue service.

In addition, the IRS mandates that these documents be in place. The Plan Document explains to employees things like how the become eligible, when they can enroll, how and when they can be reimbursed.

Where do you open a flexible spending account?

Accordingly to FSA administrators, employers have these four options to help you set up a flexible spending account for your employees.

An online HR software provider that also offer FSA benefits like Gusto;
A professional employer organization (PEO) like Justworks.
A private insurance broker that offers flexible spending accounts in addition health insurance. The options is best if you are already working with a broker and do not mind doing the administrative paperwork yourself.
A large insurance carrier like Aetna or Blue Cross who can help manage flexible spending accounts. This option is best if you already use these healthcare companies to provide your employee’s existing health insurance.

Employers will need to work with a certified benefits company or professional in order to make sure that they offer one or both kinds of flexible spending accounts in the right manner.

What cannot be charged to a flexible spending account?

A medical FSA cannot be used for over-the-counter medications like Aspirin, unless a physician has requested or prescribed them. However, a health care FSA, employees can even pay for their insurance premiums.

flexible spending account contribution limits

Are there different types of flexible spending account plans? What is the flexible spending for child care?

There are two different kinds of flexible spending accounts. The health savings account and the dependent childcare flexible savings account. Both accounts have contribution limits.

For medical expense FSA accounts, the annual contribution limit per employee is $2,750 for each of 2020 and 2021. For 2020 and 2021, the contribution limit for a dependent-care FSA is $5,000 for joint and individual tax returns and $2,500 for married taxpayers filing separately.

According to our resource editors, a healthcare FSA can be set up to help employees use pre-tax to pay for medical expenses like:

Health insurance deductibles
Doctor office visits and/or co-pays
Prescriptions
Eyeglasses or hearing aids
The cost of transportation for medical appointments
The cost of medical insurance premiums

Likewise, a dependent or child care flexible spending account known as a dependent care assistance account can be setup. This type of FSA can be used to pay for dependent care costs such as:

Childcare and after school care foe children under the age of 13.
In home care, nursing home, or childcare for disabled or seriously ill children of any age.
In home caretaking, medical care, or senior home care for a disabled or ill parent.
In home assistance, medical care, or nursing home care for a disabled or ill spouse.

In addition to dependent and childcare expenses, a dependent care flexible spending account can be used for adoption assistance services.

Flexible Spending Account Credit or debit Cards

Where do you find a flexible spending credit card? Flexible spending account cards are debit cards that allow an individual to access money in their flexible spending account. The FSA is setup along with your health insurance, and you can choose to have pre-tax dollars from your paycheck.

Does Amazon offer a flexible spending account?

Flexible spending accounts and health savings accounts allow an individual to contribute a portion of their pre-tax dollars to cover medical expenses. If the company offers one of these plans, you can use your FSA or HSA card to make a payment in your payment options on your Amazon account.

That means using pre-tax income on everything from air purifiers to prenatal vitamins. All of these also come with the delivery speed of Amazon.

Nonetheless, you must remember to register your HSA cards as a credit card. Here are a couple of cautions from Amazon. First, the individual is responsible for ensuring that their HSA card is only used for HSA eligible products.

Next, HSA cards that are registered as credit cards do not automatically restrict the type of products you can purchase with the card.

Conclusion

We began with discussing the flexible spending account. Next we defined the flexible spending account as an account setup between the employee and employer. Then we discussed the how the account works and that there are two types of flexible spending accounts. After that, we stated some of the risks associated with the FSA for both the employee and employer.

We moved forward to include the need for a plan administrator and that the IRS must be included in the plan documentation. Also, we included the contribution limitations for the medical and childcare plans. Finally, we ended the article with an explanation of the credit and debit accounts offered by Amazon.