Anna contributes pretax dollars to an account managed by her employer for her health care expenses. If she does not spend all of her money by the end of the year, she may forfeit it. What kind of plan does she have?

Question

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Anna has a Flexible Spending Account (FSA), which allows employees to contribute pretax dollars for their health care expenses. The characteristic feature of an FSA is that the funds must be used by the end of the plan year or they may be forfeited, distinguishing it from other types of health accounts.

Anna Contributes Pretax Dollars to an Account Managed by Her