Georgia Navigator Practice Exam

Which of the following is true about employer contributions to an FSA?

1. Employee's contributions must come from after-tax income

2. Employers are not allowed to contribute to an FSA

3. Employer and employee contributions can both be made to an FSA

4. The employee has total control over FSA funds without employer oversight

The correct answer is: Employer and employee contributions can both be made to an FSA

Employer and employee contributions can both be made to a Flexible Spending Account (FSA), which is a benefit that allows employees to set aside pre-tax dollars for qualified medical expenses. This means that an employer can choose to contribute to an employee's FSA, either by matching the employee's contributions, providing a set amount, or including FSA contributions as part of their benefits package. This arrangement incentivizes employees to participate in health benefit programs and can enhance overall employee satisfaction. It's important to note that the combined contributions must adhere to the annual limits set by the IRS, ensuring that there are regulations governing how much can be contributed each year. This collaborative funding approach of the FSA makes it a valuable financial tool for managing healthcare costs.