Flexible spending accounts can be a great tool to use when you are paying for certain expenses. Many companies offer these flexible spending accounts as a benefit to their employees. You can contribute to a flexible spending account with pre-tax dollar. This type of account comes in a few different varieties that will allow you to pay for different things. Here are some of the types of flexible spending accounts that you can choose from.
1. Medical Expense
One of the most common types of flexible spending account is the medical expense account. With this type of account, you can combine it with a health insurance plan to pay for most of the medical expenses that you will incur. This account will help you pay for things that medical insurance does not cover. For example, you can use the money in this account to pay for your co-pay, or your deductible. This type of account can also be used to pay for prescriptions and other treatments. You can even use it to pay for services like dental work, vision care and chiropractic care.
One of the nice features of a medical expense account is that you can also use it to buy medical supplies. For example, you can use money from this account to purchase bandages and over-the-counter medicines that you may need. It does not necessarily have to be for prescription drugs.
2. Dependent Care
Another option that you may have is a dependent care flexible spending account. With this type of account, you can use the money from your tax-deductible contributions to pay for dependent care. You can contribute as much as $5000 per year towards dependent care. In most cases, this type of account is used to pay for daycare expenses for children that live with you under the age of 13. In some cases, this type of account can be used to pay for dependent care of elderly adults that live with you.
3. Health Premiums
Another option that can be available is a flexible spending account that is designed to reimburse employees for healthcare insurance premiums. If a company does not offer a healthcare plan to its employees, they can offer this as an alternative. For example, a married couple may have a family insurance plan covered under one spouse, so the other spouse can have their insurance costs defrayed and put into a flexible spending account, or FSA.
4. Adoption Assistance
In some cases, companies will also offer a flexible spending account that will allow individuals to use the funds for adoption assistance. The process of adoption can be very expensive and many people do not have the necessary resources. With this type of account, you can set aside pre-tax money and use it to complete the adoption process. This can help pay for any expenses that are incurred during the act of adopting a child. The legal fees of an adoption process can be very expensive and without a FSA account, an adoption may not be possible.