What is Flex Dollars

Schools or employers will issue flex dollars for purchasing such items as meal plans, health costs, and other expenses.  Flex dollars are usually either an electronic currency or a portion of an employee's wage structure. Flex money accounts typically work on a declining balance system similar to a debit card. An individual using the flex dollar account decides how to spend funds, which reduce the account balance.


There are two general uses for flex dollars. The first and most familiar use is in a university or other educational setting. The second use is employer issued funds for the elective use by an employee. 

Universities and other schools will use flex dollar accounts to facilitate students purchase of food and snacks under the school's meal plan. Flex dollars are usually intended for in-between-meal food purchases. Most tuition plans will include a separate overall meal plan which covers a set number of meals each month. The flex spending plan works in conjunction with the standard program to cover smaller purchases.

Typically, an electronic encoded, wallet-sized debit card stores information for the flex dollar account. The storage card is often the student's school ID card. The card is linked to the account and used through a card reader or an online system. Flex dollars debit cards eliminate the need for students to carry cash for small purchases. Some schools have dining establishments that offer discounts for students paying with flex dollars. Also, many on-campus vending machines accept flex dollar cards. Students or parents may check the account balance and add funds to a flex dollar account online. 

Employee Flex Dollar Accounts

An employee's wages and benefits statement offer another example of flex dollars. These benefit dollars usually apply to an employee's insurance spending plans known as flexible spending accounts (FSA). Flex dollars are assigned to employees and give them the flexibility to choose their benefits from a menu of possible plans. The design of some plans focuses on employees with families, while others will focus on single employees. Employees decide how to spend their allotted flex dollars until they are used up. The benefit is it gives the employee the option of assigning coverage to only the items they feel are most necessary. 

An FSA is a type of savings account available in the United States which provides the account holder with specific tax advantages. Set up by an employer for an employee, the account allows employees to contribute a portion of their regular earnings to pay for qualified expenses, such as medical expenses or dependent care expenses.

As an example, an employee receives $1000 each year in flex dollars to split between dental, vision and prescription drug plans. They may divide the funds evenly, or purchase just one plan if they feel that would be most beneficial to their situation. Some companies provide basic benefits coverage and add flex dollars for better coverage. It is up to the issuing company or organization to determine what happens to unused flex dollars. Some organizations, for example, will allow flex dollars to be rolled over into the next calendar or billing year while others will operate under a policy that mandates flex dollars must be used in a certain time frame.