Flexible Spending Accounts

How does a Flexible Spending Account FSA work? The unreimbursed medical and dependent care spending accounts are a tax advantaged way to pay for out of pocket health care expenses. A number of nonprofit tax exempt organizations with employees have established flexible spending accounts FSA also know as flexible benefit accounts or health care reimbursement arrangements HRA. Flexible spending accounts FSAs governed by the IRS Code, allows employees to have income withheld from their paychecks before taxes for eventual health related expenses. Between 20 30% of those eligible participate in health flexible spending accounts. Flexible Spending Accounts decrease earnings, thus decrease the income tax burden.