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Open enrollment is fast approaching and with it comes the annual scramble to understand all of the changes to our benefits packages. For employers, this is also a time to ensure that your employees are prepared to make the best choices for their families when it comes to their health coverage. While most people are familiar with flexible spending accounts (FSAs), there are other types of pre-tax health accounts that your employees may not be aware of. By understanding the features and benefits of these accounts, your employees will be better equipped to make informed decisions during open enrollment.

Flexible spending accounts (FSAs)

The most popular type of pre-tax health account is the flexible spending account or FSA. FSAs allow employees to set aside money from their paychecks before taxes are taken out to use on eligible health care expenses. FSAs are great because they can help employees cover things like copayments, deductibles, and prescription drugs. One thing to keep in mind with FSAs, however, is that they typically have a "use it or lose it" clause. This means that any money that isn't used within the plan year is forfeited. Employees need to estimate their expected health care expenses for the year carefully when deciding how much to contribute to their FSA. For this reason, it's important to communicate to employees that they should only enroll in an FSA if they're confident they will be able to use all of the funds before the end of the plan year.

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