Almost everyone has medical and dental expenses. Many working parents have to pay daycare.
Some people have to pay for adult daycare.
With a 125 benefit plan, most medical expenses including out of pocket medical and insurance premiums become in essence tax free. If your employer should choose to provide the cafeteria plan as a benefit to you, there are two types of reimbursement accounts, medical and dependent care. Each pay period money is deducted from your taxable earnings prior to withholding taxes and put in an account in your name. As you incur qualified medical expenses or dependent care expenses you submit a voucher form with receipts showing dates of service and expenses incurred. This voucher is processed and deducted from your account and a check will be issued to reimburse you for your expenses.