Question

Frankie is deciding between two jobs that provide equal pay. He compares the health care benefits provided by both jobs to help him make a decision. One job offers a flexible spending account, while the other job offers him managed care. Which statement will help Frankie make a decision?

Answer 1

Answer:

The correct answer is Money in flexible spending accounts is not taxed, so employees get more take-home pay.

Explanation:

Flexible Spending Accounts (FSA), also known as reimbursement accounts, are optional benefit plans offered by many US employers. UU. which allow their employees to save money from their salaries on a pre-tax basis for eligible out-of-pocket medical expenses and dependent care.

There are two types of FSA. One is for expenses related to health care and the other for expenses related to dependent care. These two accounts are separated. You can enroll in one or both during the open enrollment period, but it is important to keep in mind that the money in one account cannot be used to pay expenses for the other.

You can enroll in an FSA only during the open enrollment period of the company unless you have a "change in family status" that meets the requirements during the year, such as a marriage, a birth or adoption, a divorce or loss of insurance coverage of your spouse. The amount (s) of the contributions you designate for the year will be deducted from your salary each month (or each pay period, check your employer's plan for more details).

You must re-enroll actively and every year in the FSA; the amounts of contributions are not maintained from one year to another. Also note that FSAs are not transferable from one employer to another. You must enroll in your new employer's plan if you change companies.