Final Answer:
The given statement "flexible spending accounts allow employees to set aside before-tax dollars for medical and dependent care expenses" is True.
Step-by-step explanation:
Flexible spending accounts (FSAs) indeed allow employees to allocate pre-tax funds for medical and dependent care expenses. These accounts are established by employers to help employees manage healthcare and childcare costs more efficiently.
FSAs operate on a before-tax basis, meaning that the money contributed to these accounts is deducted from the employee's salary before income taxes are applied. This results in a reduction of the employee's taxable income, providing a financial benefit.
Medical FSAs can cover various eligible healthcare expenses, such as copayments, deductibles, prescription medications, and certain medical supplies. Dependent care FSAs, on the other hand, can be used for qualified dependent care expenses, including daycare services for children and certain expenses for the care of dependents with disabilities.
In essence, the flexibility of these accounts allows employees to proactively plan for and address their healthcare and dependent care needs while enjoying the tax advantages associated with contributing pre-tax dollars. Therefore, the statement is true—flexible spending accounts enable employees to set aside before-tax dollars for medical and dependent care expenses.