Question

Regarding a flexible spending account, which of the following is not true?

A) You may put a predetermined amount of your pre-tax salary in the account monthly.
B) The money may be used throughout the year to pay medical or dental expenses tax-free.
C) If you don't use the funds during the year, you lose them.
D) Your employer will match your funds dollar-for-dollar.

Answer 1

The statement that is not true about flexible spending accounts (FSAs) is that employers will match your contributions dollar-for-dollar. FSAs allow employees to use pre-tax dollars for eligible medical expenses, including deductibles, but there is no requirement for employer matching.

Step-by-step explanation:

Regarding a flexible spending account (FSA), which of the following is not true? The statement that is not true about FSAs is that 'Your employer will match your funds dollar-for-dollar.' Employers are not required to match the funds you contribute to your FSA. To clarify, here are the truths about FSAs:

• You can contribute a predetermined amount of your pre-tax salary to the account monthly.
• The money can be used tax-free throughout the year for qualified medical or dental expenses.
• If you do not use the funds by the end of the plan year, you may lose them, although some plans offer a grace period or allow a carryover of a limited amount.

FSAs are a way for employees to save on taxes by using pre-tax dollars for eligible medical expenses, which can also include the deductible, or the amount that policyholders pay before insurance coverage kicks in.