Flexible Spending Accounts (FSAs) enable employees to set aside pre-tax dollars to pay for eligible child/dependent care costs and/or out-of-pocket medical costs. This is accomplished through pay reductions, which lower your federal taxable income. Money set aside in the flexible spending accounts for dependent and health care costs is not subject to federal income taxes or FICA taxes, and is used to reimburse the employee for actual dependent care and health care costs paid. In addition, funds that are set aside for medical FSAs are also exempt from Pennsylvania state taxes.
There are two types of flexible spending accounts: Dependent Care Spending Accounts and Health Care (including dental and vision) Spending Accounts. Employees may set up one or both types of accounts. You are eligible to enroll within 30 days of your date of hire or at open enrollment, which has an effective date of November 1.