Flexible Spending Accounts (FSAs)
Would you be interested in getting more money out of your paycheck? Of course you would. Your employer may offer you the opportunity to take advantage of a flexible spending account (FSA) to help you save money. FSAs allow you to set aside part of your salary before Social Security, federal and states taxes are assessed (except New Jersey and Pennsylvania) to pay for such items as health expenses or dependent care expenses.
How do FSAs work?
FSAs allow you to set aside pre-tax dollars to cover certain health care like medicine, co-pays, glasses or dependent care expenses. Principal Life offers three packaged FSA plans that include many popular features. Additional plans are also available.
The great part is, these expenses are all things that you’re probably already paying, so you can save money on taxes without actually spending any additional money. One word of caution, however: it is very important that you plan carefully for your year’s expenses, as the funds in an FSA do not carry over to the next year. You must “use-it or lose-it.”
FSA - HSA combinations
You may have heard that IRS regulations disqualify you from participating in a Health Savings Account if you have a traditional full-coverage FSA. Principal Life Insurance Company also offers a Flexible Spending Account (FSA) product specifically designed to work with Health Savings Accounts (HSA). This new “Limited-coverage” FSA covers dental, vision, and preventive care expenses as allowed by the IRS. They also feature dependent care accounts that can pay for day care expenses.
For more information
- Contact your employer or human resources representative
- Call the 1-800 number on your insurance or member ID card
