Flexible Spending Account, (FSA),cafeteria plan, flex plan, or a Section 125 plan

Flexible Spending Accounts...

Sometimes referred to as a cafeteria plan, flex plan, or a Section 125 plan, a Flexible Spending Account (FSA) lets employees set aside a certain amount of each paycheck into an account — before paying income taxes.

During the year, participants have access to this account for reimbursement of expenses — not covered by insurance — that they regularly pay for, such as:

Copies of your clients’ quarterly and year-end payroll tax returns
Deductibles, co-pays, and other eligible expenses not covered by insurance.
Prescription drugs and medical supplies.
Over-the-counter drugs that are medically necessary like allergy medications, aspirin, or antacids. (Click here for a list.)
Dietary supplements and vitamins with doctor's letter of medical necessity.
Dental services, orthodontics, and dentures.
Eyeglasses, contacts, solutions, and eye surgery.
Weight-loss programs (associated with a specific disease).
Weight-loss over-the-counter drugs with doctor's letter of medical necessity.
Chiropractic services.
Vitamins with doctor's letter of medical necessity.
Psychiatric care and psychologist's fees.
Smoking-cessation programs.
Smoking-cessation over-the-counter drugs.
Adult and child daycare services.
Adoption expenses.

When employees use tax-free dollars to pay for these expenses, they realize an increase in their spending power, and substantial tax savings.

The company saves too — about 8% (FICA match) on every dollar employees contribute to the plan.