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About This QuizA useful extra benefit that some employers offer their employees is a flexible spending account (FSA). While these are fairly straightforward, there are a few key rules that you must follow so that they don't backfire on you. Take this quiz to see if you understand all the intricacies of FSAs.
Other than for health costs, for what other type of expenses do some employers set up flexible spending accounts?
With a flexible spending account, the employer pays for any fees associated with the accounts they open and oversee.
What is the drawback to using a flexible spending account (FSA)?
You forfeit any unused money at the end of the year.
Because any remaining money is forfeited at the end of the year, you must be careful not to place too much into it during the year.
They are taxed at a slightly higher rate.
You can't use an FSA with an HMO.
What benefit do flexible spending accounts offer employees, beyond simply covering medical expenses?
They lower you taxable income.
Since contributions to your FSA come out of your paycheck before income taxes, you are taxed on a lower gross amount.
They reduce your medical insurance premiums.
They increase your take-home pay.
What retirement benefit was established around the same time as was the flexible spending account?
Both were established in the 1970s. Employees gained new benefits, often using pre-tax contributions.
Retirement Insurance Benefits (RIB)
What type of medical expense is ineligible for reimbursement from a flexible spending account?
Any expense that can be shown to be a medical necessity is eligible for reimbursement.
Under what circumstances might you be able to change your FSA contributions not during a standard open enrollment period?
If you experience a seriously life-changing event, such as the birth of a new child, you can usually alter your FSA contribution.
What is the current limit for a Health Care or Dependent Care FSA in the United States?
You may spend the entire $5,000 earlier in the year than you have finished contributing so long as you continue contributing throughout the year until you've contributed the full amount.
When must you use all of your FSA funds by before they are forfeited?
one month into the next year
10 weeks into the next year
New rules allow you to actually use your FSA funds into the beginning of the following year. The period now ends in March.
Which of these expenses is covered by a Health Care FSA?
If your insurance does not already cover infertility treatments, you can use your FSA to cover the cost.
What is an example of an expense that would be covered by a Dependent Care FSA?
a housekeeper who also babysits
A Dependent Care FSA is designed to allow you to work by covering expenses related to caring for a child (or adult dependent).
babysitting fees for an older child who watches a younger child
day camp for one child that allows you to care for a different child
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