Flexible Spending Accounts: The Benefits

Serve and set examples to others. This is what the world and Regis University teaches us. When looking at the statement to serve others and a business connection, one must look at the benefits an employer provides for their employee. Recently, employers have begun to look at the different ways to help with healthcare costs and how to maximize the benefits they provide for their employees. One way to accomplish this is by creating a Flexible Spending Account for their employees.
A Flexible Spending account is an employee benefit program that allows you to set aside money on a pre-tax basis for pre-determined health care and dependent care expenses (Federal Flexible Spending Account Program, 2009). Basically, this means that each employee keeps more of their money (Federal Flexible Spending Account Program, 2009). A Flexible Spending Account saves individuals money by reducing income taxes (About.com, 2009). An individual who contributes to this account does not report this money to the IRS due to it being taken out pre-tax (About.com, 2009). This allows an individual to save hundreds of dollars a year by increasing your spendable income (About.com, 2009).
There are three types of Flexible Spending Accounts. The first one is the health care flexible spending account. This is used to pay for eligible health care expenses that occur and are not covered under a person’s insurance (Federal Flexible Spending Account Program, 2009). Some examples would be co-payments or over-the-counter-medicines (Federal Flexible Spending Account Program, 2009). The second type of account is a limited expense health care flexible spending account. This flexible spending account is used in place of the general spending account if the person participates in a High Deductible Health Plan (Federal Flexible Spending Account Program, 2009). This account allows for the employee to submit dental and vision expenses (Federal Flexible Spending Account Program, 2009). The third account is the dependent care flexible spending account. This account is used to pay childcare or adult dependent care expenses so that the employee and their spouse can work, attend school, or job hunt (Federal Flexible Spending Account Program, 2009).
You are probably asking how the account works. During January, an employer usually requests that each individual determine how much they want to contribute to the account for the entire year because there are limits. One way to determine how much a person should contribute is to make a list of the expected out-of-pocket medical expenses for everyone in the family (About.com, 2009). Once you determine the amount you are going to contribute, the money will be automatically taken out of your paycheck. Besides the employee contributing, most employers contribute at least a hundred dollars for every hundred dollars put in and not exceeding $1500 (Hamilton Health Care, 2009).
An individual is able to utilize this program if they incur medical expenses that are not covered in their health insurance plan. In order to get reimbursed, one has to submit a copy of the Explanation of Benefits and proof of payment to the administrator (About.com, 2009). After that is submitted, they will issue you a reimbursement check (About.com, 2009). Some of the expenses that are eligible for reimbursement are: fees to medical providers, fees for hospital services or laboratory, acupuncture, inpatient treatment, smoking-cessation programs, false teeth, hearing aids, crutches, wheelchairs, some fees that are in excess of reasonable amounts, costs of vasectomies, hysterectomies, and birth control, non-elective cosmetic surgery, co-pays, deductibles, braces, and prescription drugs (About.com, 2009). These expenses can be costly and cause financial hardships if one does not have a backup plan. The Flexible Spending Account gives a peace of mind to these types of costly expenses.
In conclusion, employer-provided benefits, such as the flexible spending account, have a profound effect on our financial situation. Employers have begun to use this type of account to serve their employees as well as their patrons. The Flexible Spending Account allows for employees to save pre-tax for when emergencies come up. This is vital when our economy is facing a hurdle like we are now. I personally use the flexible spending account so I can rest assure that money is being saved for emergencies. This gives me a peace of mind. Anyone who has the opportunity to take advantage of this account should. Employers are looking to serve and take care of their employees so employees should look to serve and take care of their self and their family.

References:
About.com, (2009). Flexible spending accounts. Retrieved June 16, 2009, Web site:
http://financialplan.about.com/cs/insuranc1/a/FlexSpendPlan.htm
Federal Flexible Spending Accounts Program, (2009). Did you know? Retrieved June 16,
2009, Web site: https://www.fsafeds.com/fsafeds/index.asp
Hamilton Health Care, (2009). 2009 benefits guide. Retrieved June 16,
2009, Web site: www.hamiltonhealth.com/Portals/0/pdfs/HHCS%20Benefit%20Guide% 2012-10-08.pdf