What is the primary purpose of a Flexible Spending Account (FSA)?

The primary purpose of a Flexible Spending Account (FSA) is indeed to reimburse employees for medical expenses. FSAs are employer-sponsored benefit plans that allow employees to set aside pre-tax dollars for qualified medical costs, such as copayments, prescription medications, and various eligible medical expenses that are not covered by other health plans. This helps employees save money on their healthcare expenses by reducing their taxable income.

FSAs are particularly valuable because they enable employees to pay for out-of-pocket healthcare costs with funds that have not been taxed, thereby maximizing their take-home pay while managing healthcare expenses more effectively. This arrangement promotes broader access to necessary medical services and expenses for employees, helping to alleviate some of the financial burdens associated with healthcare.

The other options focus on different areas. Providing direct cash benefits to employees does not capture the key functionality of an FSA, as it primarily aims to help with specific medical costs. Options related to retirement savings and funding employee training programs are not relevant to the purpose of FSAs, as these are covered by other types of benefit plans and accounts, such as 401(k) or educational assistance programs.