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Flexible Spending Accounts

If you are offering an employer-provided health care plan to your employees you can establish a medical Flexible Spending Account to help your employees pay for unreimbursed medical expenses. An FSA allows employees to pay for many medical and dependent care expenses with “pre-tax” dollars.

When your organization establishes a Flexible Spending Account (FSA), employees can elect to have a set amount withheld from each paycheck. As they incur eligible expenses, they submit documentation to you and are reimbursed from those untaxed funds. Money withheld from each paycheck is not reported as taxable income for federal income tax or Social Security/Medicare tax. In most states, FSA contributions are not reported for state income tax purposes.

You may offer two types of FSA:

  • A dependent care FSA is used only for eligible dependent care expenses.
  • A health care FSA is used only for eligible medical expenses. If your organization offers a health care plan, this is a way to help employees with those medical expenses that are not reimbursed.

Employees cannot transfer money from one FSA to the other. In 2018, the maximum contribution to a health care FSA was $2,650 and $5,000 to a dependent care FSA.

For more information, visit and search “FSA,” or call MMBB at 800.986.6222.