Workers Offered Flexible Spending Accounts

This fall, many companies will allow their employees to enroll in flexible spending accounts to cover some of their health care costs next year, the AP/Detroit News reports. With the accounts, workers are permitted to direct part of their pre-tax salary to an account to cover "legitimate" health care expenses that are not covered by insurance or an employer, such as prescription drug copayments, eye glasses, orthodontic work and psychiatric care. Money in the accounts also can be used to pay for the care of a disabled spouse or aging parents if they are considered dependents for tax purposes, the AP/News reports. Typically, employees may "set aside" $1,000 to $2,000 each year, but some companies allow accounts of up to $5,000. However, funds that are not used by the end of the year are forfeited, Gary Kushner, head of Kushner & Co., an employee benefits consulting firm, said. "People need to be a bit conservative in deciding how much to set aside, because if they don't use it, the money reverts at the end of the year to the plan," Kushner added. More than 90% of Fortune 500 companies offer flexible spending accounts, and between 25% to 40% of smaller companies have the benefit (Powell, AP/Detroit News, 9/18).