What is an FSA?

An FSA is commonly referred to as a flexible spending arrangement. This is a tax advantaged plan where one can set aside a portion of their earningsThere are many types of FSA but the most common is a medical FSA.

In its most common form this is an account one can set aside using deductions from payroll through work to pay for medical expenses including prescriptions, eye glasses, deductibles and many more. Often times employers will even help fund an FSA for example one large fortune 500 company will match up to $1000 for every dollar you put into your account.

So should you max out your FSA?

Not necessarily keep in mind that in a lot of plans if you don't use the money within the plan year and the grace period this is not ideal. The best method to decide is to take into account your expenses from the previous year. If you itemized these deductions your tax return should give you the correct amount.

Why do businesses over FSA or HSA, or HRA?

Often times businesses will over this option paired with a higher deductible, this gives the employees more of a say in their medical expenses, it helps keep costs lower and if your medical expenses are low it makes more sense to have a higher deductible paired with one of the above options.

Why don't all businesses over these plans?

I have heard various reasons from businesses why to not offer the plan one of the main ones is that it may be more administrative work, more than one thing to monitor etc. Also some employers don't really understand the benefits and setbacks of these options so they stick with the status quo.

Medini Financial will bring you more information regarding various insurance and financial service questions as long as they keep coming. Again thank you so much for the email questions. If you have any comments or questions please forward them to Medinifinancial@gmail.com