Insurance Glossary

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Insurance Term - Flexible Spending Accounts or Arrangements (FSA)

This is applicable in USA only. Such accounts are offered and administered by employers. These provide a way for employees to set aside an amount to pay for their share of insurance premiums or medical expenses not covered by the employer’s health plan. The employer may also make contributions to a FSA. Typically, benefits or cash must be used within the given benefit year, or the concerned employee loses the money. Flexible spending accounts can also be provided to cover childcare expenses, but such accounts must be established separately from medical FSAs. In short, these are tax-advantaged programs for reimbursement of healthcare expenses that enable employees to pay for their incurred expenses with a non-taxed portion of their salary.

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