What is a healthcare flexible spending account?
A healthcare flexible spending account, or FSA, is a generic term for a voluntary reimbursement program many employers offer their employees to help pay for healthcare-related expenses not covered by insurance. The money placed in these accounts is not taxed. Approximately ninety-one percent of employers offering reimbursement accounts offer healthcare FSAs (Source: Hewitt Associates).An employee’s participation in a healthcare FSA is also voluntary. The account may be funded by contributions from the employee alone, or a combination of employer and employee contributions. The employee may use the monies to reimburse a variety of healthcare-related expenses that are not included in his/her health insurance plan, such as doctor’s visits and medications. The funds are subject to a “use-it or lose-it” rule during each benefit plan year. The median amount forfeited from FSAs is approximately $100 (Source: Hewitt Associates). Recognizing this limiting factor, the U.S. Department of Treasury