flexible spending account

Definition

A benefit offered to an employee by an employer which allows a fixed amount of pre-tax wages to be set aside for qualified expenses. Qualified expenses may include child care or uncovered medical expenses. The amount set aside must be determined in advance and employees lose any unused dollars in the account at year-end.

Use this term in a sentence

Many employers offer their employees a flexible spending account to help pay for qualified medical expenses on a pre-tax basis.

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