Skip Lovette, CPA
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Medical Flex Spending Accounts: Worth It?
Many employers haven't added a flexible spending account option to their benefits package because they assume that doing so is complex and expensive. But a flexible spending account can be a great addition to your benefits packages and easier to do than you might think.
The most common type of flexible spending account is a medical expense flexible spending account. These FSAs are essentially accounts that your employees can contribute a portion of their paycheck to. The money placed in the flexible spending account is tax free, and it can be used to pay for any number of health related expenses. Those with insurance copays can use their flexible spending account to pay them and in most cases any type of health related product or service will qualify to be paid for from a flexible spending account. This includes everything from cough syrup to first aid kits, and makes a strong case for the tax free benefits that a flexible spending account offers.
Those with other needs could find a flexible spending account that suits their needs as well. There are flexible spending accounts designed for those trying to adopt a child, for example, or for those who need to offset the costs of paying for the care of their dependents. The specifics of flexible spending accounts will vary greatly depending upon the exact nature of the account and its provider, but most of your employees will be able to benefit from the addition of a flexible spending account.
While the benefits are great, the surprising thing about a flexible spending account is that it's relatively inexpensive for employers and simple to implement and manage. The costs are often lower than most employers realize and since it is the employees paying the funds into the flexible spending account instead of the employer making contributions, so affordability is usually a small matter.
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