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> FSA - Advantages and Disadvantages
Flexible Spending Accounts (FSA) Advantages and Disadvantages
What are the advantages of an FSA account?
Your take-home pay will be higher and your taxable income will be lower because the expenses you receive reimbursement for are not subject to Federal, State and FICA withholding.
Pre-tax accounts are an excellent way to save money when paying for health care expenses not covered by your health plans or for the cost of your child’s daycare.
You can also lower the cost of your health insurance premium contributions if you select a medical plan that requires an employee monthly contribution.
Contributions to an account may be as little as $5.00 per pay period.
What are the disadvantages of an FSA account?
These are “USE IT OR LOSE IT” accounts. The Health Care and Dependent Care accounts contain an IRS Section 125 provision, which specifies that if you contribute more than what you submit for reimbursement, you forfeit the unused amount at the end of the year.
Expenses for a domestic partner do not qualify,
your domestic partner is a qualified tax-dependent. Reimbursed expenses must be for self, a spouse, or a tax dependent.
Benefits based upon wages, such as Social Security, may be reduced slightly because your wages are reduced. This plan does not affect PERS/OPSRP retirement contributions.
Once the plan year starts, changes in the FSA Accounts may only be made if there is a qualified family status change. The plan year aligns with the calendar year.
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