As health care costs continue to grow, employers and employees alike are searching for ways to reduce the financial burdens they face, and many are turning to consumer-driven health plans that include flexible spending accounts.
With an FSA, employees can put away pre-tax money to use for certain out-of-pocket medical expenses, and this type of account offers employees a considerable tax advantage, says Jody Dietel, chief compliance officer at WageWorks Inc.
"Employers should offer FSAs because there are growing out-of-pocket expenses for employees, and this helps employees manage those expenses on a tax-advantage basis that benefits both the participant and the employer," Dietel says. "As employers move to higher-deductible plans or more cost sharing with employees – and that's going to continue even under health care reform – it's important that employees can do that on a tax-advantage basis."
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