Flexible Spending Accounts are tax-favored accounts that permit a participant to set aside money pre-tax for qualified Medical and Dependent Care costs. FSAs are a benefit accessible by most owners that permit an employee the chance to set some of his wages aside before taxes to pay for a lot of common out of pocket operating cost.
Most cafeteria plans suggest two different flexible spending accounts; one is eligible for medical expenses and the other is for dependent care expenses. The other FSA, a Dependent Care Flexible Spending Account, pays for childcare and adult dependent care that are essential to permit you or your partner to work, look for work, or attend school full time. With a Dependent Care FSA, you may only be reimbursed up to the sum currently accessible in your account. Use it-or lose it refers to an IRS requirement that if you do not use all the money you have elected into your FSA accounts, any funds remaining in an FSA after the run-out period will be forfeited because it cannot be rolled over or refunded to you.
Only services incurred on or after your effective date through the end of the plan year are entitled for repayment. Long-Term Care and Temporary Continuation of Coverage are not qualified for reimbursement. Vitamins and other food supplements are ineligible for reimbursement without a doctor’s prescription.