FSA - Flexible Spending Account

Understanding Flexible Spending

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

What if we told you Benefit Advantage could save you hundreds, possibly thousands of dollars by simply enrolling in a Flexible Spending Plan? Flexible spending creates more spendable dollars from the same paycheck because you pay less in taxes (see example below).

Example Without FSA Plan Example With FSA Plan
Monthly Pay $3,000 $3,000
Pre-Tax Deductions
Insurance Premiums $0 $60
Medical Expenses $0 $50
Dependent Care Expenses $0 $350
Taxable Income $3,000 $2,540
Tax (estimate) $829 $702
Net Pay $2,171 $1,838
After Tax Deductions
Insurance Premiums $60 $0
Medical Expenses $50 $0
Dependent Care Expenses $350 $0
Spendable Income $1,711 $1,838
Monthly Increase in Spendable Income $0 $127
Annual Increase in Spendable Income $0 $1,524


This employee saved $1524 last year through their Flexible Spending Cafeteria Plan. Calculate your annual savings with the Savings Calculator.

As of 2014, employers are allowed to add a $500 rollover provision, a modification of the "use it or lose it" regulation.

If you currently participate in premium sharing in Health Insurance, Dental Insurance, Vision Insurance or Group Term Life Insurance, you should take advantage of one or all of the following pre-tax benefit plans:

  • Premium Only Plan

    Eliminates FICA, and in most states Federal and State income taxes, on the employee's share of most group insurance premiums.

  • Health Care Flexible Spending Accounts

    Eliminates FICA, and in most states Federal and State income taxes, on unreimbursed employee health care expenses like deductibles, co payments, vision care, dental care and many other expenses.

  • Dependent Care Flexible Spending Accounts

    Eliminates FICA, and in most states Federal and State income taxes, on up to $5,000 (or $2,500 if filing separately) of employment related day care expenses annually.

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