Flexible Spending Accounts (FSAs) also referred as “Cafeteria” or “Section 125 Plans”, were designed by the IRS to provide a tax relief to employees on every day unreimbursed medical and dependent day care expenses. FSAs allow employees to contribute pre-tax dollars to these accounts; these contributions are not subject to FICA, federal or state payroll taxes. This plan allows an employee to save as much as 30 to 40% on directed funds and allows an employer to save 7.65% FICA tax on all the contributions made to the plan.