With taxes and medical expenses increasing, it isn't hard for U.S. workers to get discouraged. Nothing is more frustrating than working hard all year, just to have the government and the pharmacy eat the fruits of your labor. But there are ways to save on those expenses. One that is becoming increasingly popular is the use of flex funds. You can open a flexible spending account, or FSA, to set aside pre-tax money for health-related expenses not covered by insurance, or for expenses related to dependent care. Some employers even offer FSAs for mass-transit expenses, to help you save money on your commute.
There are many benefits for employees with flexible spending accounts. Their employers are responsible for opening and maintaining the accounts, and they pay all of the fees associated with the accounts. And, using pre-tax income helps lower income taxes. But, there's always the inevitable catch: If you put more money into the account than you can spend on eligible expenses in the year, that money is forfeited. So, careful planning is your greatest investment into an FSA.
Flex spending can be used in more places than people think. Many health expenses qualify as eligible for reimbursement through an FSA. The main idea is to show that the expense is necessary to the employee or his or her dependents, and isn't a cosmetic procedure. You can even use flex funds to pay for your child's braces!
In this article, we'll explore the purposes and uses of flex funds. We'll start by looking at the rules for setting up and using a flex account. If you want to know just how much money you can save with a flexible spending account, read on.