Assignment No.

3 – Short Report: Flexible Spending Account

[Student Name]

[Course Name]

[Instructor Name]
 Table of Contents

1. Introduction.........................................................................................................................................3

2. Are FSA a fine thought for workers and trade?...................................................................................3

2.1 Advantages of FSA account..............................................................................................................4

2.2 Disadvantages of FSA account..........................................................................................................5

3. Conclusion...........................................................................................................................................7

Works Cited.................................................................................................................................................8
 1. Introduction

Flexible Spending Account, or FSA as shortly put, is any such account of savings nature

which consists of setting aside funds for later use. These funds are often used for healthcare

purposes. These funds are not taxable by nature. Therefore, these are quite popular given they

fall within the tax-credit and/or tax advantage brackets. These schemes can be established by any

corporation for their consumers to aid their healthcare process. These schemes have proven to be

beneficial and have started gaining popularity in regards to how advantageous they can prove to

be. These accounts are now known as “Flexible Spending Arrangement or reimbursement

accounts”[CITATION med \l 1033 ].

2. Are FSA a fine thought for workers and trade?

FSAs can be or cannot be a fine thought for any trade and workers since there are

dissimilar health necessities of each organization relying on lots of facets such as climate of the

organization (whether organization is situated in the healthy or pollution free atmosphere),

earnings of the workers and trade, thinking of the workers as well as trade as regards to FSA

(whether they desire to have the FSA account or not), etc. Lots of organizations are situated

inside the regions where atmosphere is not good, or inside the regions having more traffic that

can cause accidents. These sorts of organizations would require the FSA. Moreover, lots of

organizations are having the healthy and calm atmosphere and having the health conscious

workers. These sorts of organizations would hardly ever require the FSA. Additionally, size or

scale of the organization has a vital participation in the decision that whether to have any FSA or

not since it will be straightforward for any diminutive scale organization to have and sustain the
FSA accounts, moreover organizations of large scale will find it somewhat hard to have and

sustain the FSA accounts. Therefore, it cannot be stated absolutely that whether FSA accounts

are good to have or not since each trade or organization have dissimilar necessities on the basis

of response, earnings of its workers as well as of organization, and on the basis of regions in

which organization is situated.

2.1 Advantages of FSA account

Let us presume that the LMN Company is not having the FSA scheme for its workers. LMN is a

company operating in construction of the food items such as fast food. The manager can present

the succeeding disadvantages and advantages of FSA to her or his boss so that boss can decide

that whether FSA can be fine for its circumstances or not. The FSA accounts have lots of

advantages or benefits for the organization as well as for the workers.

The succeeding are few advantages of FSA that can be considered to decide that whether the

organization should set up the FSA or not:

The initial positive point of FSA is that take-home salary of the workers will be more or

superior and the taxable earning of the workers will be less for the reason that expenditures for

which the workers get the reimbursement are not subject matter to FICA, State, and Federal

preservation.

Workers can also make lesser the charges of their contributions of “health insurance

premium” through opting for any medical scheme, which necessitates monthly contribution or

payment of workers.

Contribution or payment to any FSA account may be as modest as dollar 5.00 per salary

or reimbursement period.
 Accounts of Pre-Tax are an outstanding method to save the money at the time of giving

expenses of health care that are not enclosed in the health schemes opted from the workers or for

the charges of the daycare of the children of workers.[ CITATION FSA \l 1033 ]

The money that is subtracted or withholds from the paycheck of workers and deposit or

put down in the FSA of workers is never accounted to IRS, therefore, it lessens the taxable

income legal responsibility of workers and augments the amount that the workers can spend or

use.

Any Dependent care Flexible Spending Account or FSA can authorize the workers to

continue with their tasks as much as they desire, for the reason that workers can have the funds

for paying elderly or child care.

If workers or any worker make use of the entire allotted expenditures of the year in single

day, then the workers will be compensated right away although carry on to pay or give their

allocation all through the year. Any large expenditure at the commencement of the year signifies

that the workers do not have to pay money for it for moderately a little period of time.

In the FSA scheme, there is grace period of two and half month at the completion of the

year for workers to apply for repayment for the expenditures that had taken place all through the

preceding year.[ CITATION Jen13 \l 1033 ]

When the workers will take benefit from FSA then they will realize happiness and

satisfaction. The health safety of the workers will be assured by the FSA. This will assist the
workers in carrying out their work with efficacy and the organization will attain the benefits

from the effective work of workers.

2.2 Disadvantages of FSA account

The FSA account as regards to “Dependant Care” signifies a “LOSE IT OR USE IT”

account. It signifies that any unexploited or not used funds on the completion of year will be lost.

It signifies that if the workers will not make use of the funds of their FSA account all through the

year, then their funds will be lost or given to the organization subsequent to the completion of the

year. For this reason: workers may refuse to have the FSA account.

The FSA account as regards to health care does have one overturn of full amount of

dollar five hundred. If FSA account of health care has the extra money from dollar five hundred

at the completion of the calendar year then that money will be lost from workers and will be

given to the organization.

Expenditures for any household or home partner do not meet the criteria, except the

domestic partner of the workers is a competent or eligible tax-dependent. Reimbursed

expenditures are obligatory to be for a spouse, self, or any tax reliant.

The advantages of FSA that are based on specific wages like Social security might be

lessened to some extent for the reason that wages of workers are lessened. This scheme does not

have impact on the retirement giving or contributions as regards to OPSRP/PERS.

Once the plan year of FSA commences, the alterations into accounts of FSA may merely

be carried out if there exist any eligible alteration in the status of family. The plan year of FSA

line up with the calendar year. [ CITATION FSA \l 1033 ]

 One more disadvantage or negative point with the FSA scheme is that this sort of scheme

tackles the childcare. Lots of persons or workers opt to make most use of the finances from their

accounts of FSAs to pay money for the child care expenditures all through the way or passing of

the year. Moreover, this thing is completely fine or does not cause any harm, although it can

result for the workers to lose the tax credit of their child when they file their taxes. The tax credit

of the child can be a gigantic source or basis for the savings on the taxes and the workers will be

unable to find these tax benefits if they opt to take benefit of the FSA (or Flexible Spending

account) in the region of childcare. [ CITATION Pro \l 1033 ]

The workers at the fast foods company may have the health problems since they may eat

the fast food or at the time of preparing the foods. Therefore, the major disadvantage of losing

the FSA funds can be overcome in the LMN organization as it can be anticipates that the workers

of the fast food organization will have health difficult minimum once in one year.

3. Conclusion

From this document, one can observe that accounts as regards to FSA have copious advantages

as well as disadvantages. Therefore, a trade-off among together disadvantages and advantages of

FSA should be made so that it can be carried out effectively inside organization.
 Works Cited

Calonia, J. (2013, May 31). Pros and Cons of Flexible Savings Accounts. Retrieved from

www.gobankingrates.com: http://www.gobankingrates.com/savings-account/advantages-

disadvantages-flexible-spending-accounts/

FSA - Advantages and Disadvantages. (n.d.). Retrieved from www.co.marion.or.us:

http://www.co.marion.or.us/BS/Risk/Pages/FSAAdvantagesDisadvantages.aspx

Pros and Cons of all FSAs. (n.d.). Retrieved from www.finweb.com:

http://www.finweb.com/insurance/pros-and-cons-of-all-fsas.html#axzz3xZjTvaZI

U.S. Health Insurance. (n.d.). Medical Flexible Spending Account. Retrieved March 07, 2020 ,

from www.healthinsurance.org: https://www.healthinsurance.org/glossary/medical-

flexible-spending-account/