Question

An employer-sponsored medical plan that allows each employee to have pretax earnings deposited into a specially designated account for the purposes of paying specific types of expenses is called a Question 46 options: flexible spending account. medical emergency account. medical contingency account. pre-tax contingency account. None of these.

Answer 1

An employer-sponsored medical plan that allows each employee to have pretax earnings deposited into a specially designated account for the purposes of paying specific types of expenses is called a "flexible spending account".

What is flexible spending account?

A flexible spending account, often referred to as a flexible spending arrangement, is a specific account that you fund and utilize to cover a number of your out-of-pocket medical expenses.

Some features of flexible spending account are-

• FSA monies can be used to cover copayments and deductibles, but not insurance premiums.
• Both over-the-counter medicines with a prescription from a doctor and prescription medications are eligible for FSA reimbursement. Insulin reimbursements are accepted without a prescription.
• Medical items like bandages, equipment like crutches, and diagnostic tools like blood sugar test kits can all be paid for with FSAs.

Therefore, as long as your annual medical bills and/or costs for taking care of dependent are reasonably predictable. On average, every dollar invested will result in tax savings of 20–25%. Your savings grow as your income does.

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