Question

Jack has to decide between two jobs that provide equal pay. He decides to compare the healthcare benefits provided by both jobs to arrive at a decision. He wants to choose the job that offers him a flexible spending account over the job that offers him managed care.

Which of the following, if true, strengthens his decision?

a. With managed care, the insurer makes decisions about health care, which helps avoid unnecessary procedures.
b. Money in flexible spending accounts is not taxed, so employees get more take-home pay.
c. The money in the flexible spending accounts must meet IRS requirements.
d. At the end of each year, money remaining in a flexible spending account reverts to the employer.
e. Contributions to a flexible spending account may not exceed $5,000 per year.

Answer 1

B) Money in flexible spending accounts is not taxed, so employees get more take-home pay.

Step-by-step explanation:

The main advantages of flexible spending accounts are:

• Money spent in flexible spending accounts can be deducted from your gross income, which means that you will end up paying less taxes.
• Some auxiliary healthcare costs are not covered by health insurance (e.g. OTC prescriptions, diagnostic tests, travel vaccines, etc.) but can be paid by flexible spending accounts.