Download Locations:
Summary:
Health care Flexible Spending Accounts (FSAs) are benefit plans established by employers to reimburse employees for health care expenses such as deductibles and copayments. FSAs are usually funded by employees through salary reduction agreements, although employers are permitted to contribute, as well. The contributions to and withdrawals from FSAs are tax exempt. FSA contributions are forfeited if not used by the end of the year. Legislation has been introduced in recent years to permit part or all of remaining balances to be rolled over to accounts next year or to qualified retirement accounts. Up until his most recent budget proposal (FY2005), President Bush's annual submissions had sought the rollover of up to $500 remaining in an FSA at the end of the year. In 2002, 39% of private-sector employees could establish a health care FSA, though actual usage was lower. FSAs were not as common for workers in small businesses. In establishments with fewer than 50 employees, 7% of workers had access, compared to 57% of workers in establishments with at least 50 employees. In July 2003, FSAs became available to federal employees for the first time. These other points should be noted about health care FSAs:
