In 1999, a Hewitt Associates survey of more than 1,000 large employers found that 90 percent offered the pre-tax benefits. Companies have the discretion of offering the programs, which come under Section 125 of the federal tax code.
Healthcare tends to be the most popular since everyone has medical costs.
The main risk for employees utilizing the flexible accounts is the fact that any money not used is lost. This rule was set up by the IRS as a tradeoff for the obvious advantages of avoiding the usual taxes. So people who have excess healthcare funds toward the end of the year would be smart to schedule dental checkups or stock up on qualifying medical supplies. Employers benefit also. They can save on payroll taxes by offering the accounts.