Flexible Spending Account (FSA)
A Flexible Spending Account (FSA) is an employee-owned account that uses pre-tax dollars to pay for out-of-pocket medical, dental, vision and dependent expenses for employees and their family members. An FSA program generates tax savings for both employers and employees.
Medical – Flexible Spending Account:
Medical FSA plans reduce medical benefit cost for both employers and employees. As tax rates go up, savings increase.
Examples of What’s Covered Under A Medical Savings Account:
- Deductibles & Co-Insurance Payments for Both Medical and Dental
- Office Visit, Emergency Room & Hospital Co-Payments
- Birth Control Pills
- Chiropractic Care
- Acupuncture
- Educational Aids For Handicapped Individuals
- Eye Exams, Glasses, Contact Lenses & Solution
- Lasik Eye Surgery
- Hearing Aids and Batteries
- Infertility Treatment
- Orthodontia
- Orthopedic Shoes
- Physical Therapy
- Prescription Drugs & Co-Pays
- Psychiatric/Psychologist/Social Worker Counseling
Example: John is married, earning $40,000.00 per year, with two children and has $1,000.00 of out-of-pocket medical expenses.
| Without an FSA | With an FSA | |
| Annual Salary | $40,000.00 | $40,000.00 |
| Pre-tax deferral | -$0 | - $1,000 |
| Taxable Income | $40,000 | $39,000 |
| Taxes* | -$14,000 | -$13,904 |
| Medical Expenses | -$1,000 | -$0 |
| Take Home Pay | $24,740 | $25,096 |
Annual Savings $356
John’s Net Cost $644
John’s Net Cost $644
*Includes FIT and FICA taxes. NJ residents are required to pay state income tax on gross pay.
Dependent – Flexible Spending Account:
Dependent FSA Accounts reduce dependent care cost for both employers and employees. As tax rates go up, savings increase.
Dependent FSA Accounts reduce dependent care cost for both employers and employees. As tax rates go up, savings increase.
A Flexible Spending Account (FSA) is an employee-owned account that uses pre-tax dollars to pay for out-of-pocket medical, dental, vision and dependent expenses for employees and their family members. An FSA program generates tax savings for both employers and employees.
Medical – Flexible Spending Account:
Medical FSA plans reduce medical benefit cost for both employers and employees. As tax rates go up, savings increase.
Examples of What’s Covered Under A Medical Savings Account:
- Deductibles & Co-Insurance Payments for Both Medical and Dental
- Office Visit, Emergency Room & Hospital Co-Payments
- Birth Control Pills
- Chiropractic Care
- Acupuncture
- Educational Aids For Handicapped Individuals
- Eye Exams, Glasses, Contact Lenses & Solution
- Lasik Eye Surgery
- Hearing Aids and Batteries
- Infertility Treatment
- Orthodontia
- Orthopedic Shoes
- Physical Therapy
- Prescription Drugs & Co-Pays
- Psychiatric/Phychologist/Social Worker Counseling
Example: John is married, earning $40,000.00 per year, with two children and has $1,000.00 of out-of-pocket medical expenses.
| Without an FSA | With an FSA | |
| Annual Salary | $40,000.00 | $40,000.00 |
| Pre-tax deferral | -$0 | - $1,000 |
| Taxable Income | $40,000 | $39,000 |
| Taxes* | -$14,000 | -$13,904 |
| Medical Expenses | -$1,000 | -$0 |
| Take Home Pay | $24,740 | $25,096 |
Annual Savings – $356
John’s Net Cost – $644
John’s Net Cost – $644
*Includes FIT and FICA taxes. NJ residents are required to pay state income tax on gross pay.
Dependent – Flexible Spending Account:
Dependent FSA Accounts reduce dependent care cost for both employers and employees. As tax rates go up, savings increase.
Dependent FSA Accounts reduce dependent care cost for both employers and employees. As tax rates go up, savings increase.