If you have a health plan through a job, you can use a Flexible Spending Account (FSA) to pay for copayments, deductibles, some drugs, and some other health care costs. Using an FSA can reduce your taxes.
What is an FSA?
A Flexible Spending Account (also known as a flexible spending arrangement) is a special account you put money into that you use to pay for certain out-of-pocket health care costs.
You don’t pay taxes on this money. This means you’ll save an amount equal to the taxes you would have paid on the money you set aside.
A few fast facts about FSAs
- FSAs are limited to $2,750 per year per employer. If you’re married, your spouse can put up to $2,750 in an FSA with their employer too.
- You can use funds in your FSA to pay for certain medical and dental expenses for you, your spouse if you’re married, and your dependents.
- You can spend FSA funds to pay deductibles and copayments, but not for insurance premiums.
- You can spend FSA funds on prescription medications, as well as over-the-counter medicines with a doctor’s prescription. Reimbursements for insulin are allowed without a prescription.
- FSAs may also be used to cover costs of medical equipment like crutches, supplies like bandages, and diagnostic devices like blood sugar test kits.
- See a list of generally permitted medical and dental expenses.
FSA limits, grace periods, and carry-overs
You generally must use the money in an FSA within the plan year. However, we provide a “grace period” of up to 2 ½ extra months to use the money in your FSA.
At the end of the year or grace period, you lose any money left over in your FSA. So it’s important to plan carefully and not put more money in your FSA than you think you’ll spend within a year on things like copayments, coinsurance, drugs, and other allowed health care costs.
Why Enroll in a Health Care FSA?
- Save an average of 30 percent on eligible Health Care expenses
- Access the full amount of your account on day one of the FSAFEDS plan year
Calculate your savings by using this calculator.
How to Sign Up
Decide how much to contribute to your Health Care FSA account based on how much you plan to spend in the upcoming year on out-of-pocket medical, dental, and vision care expenses.
You will sign up by completing the FSA form and choosing an amount to contribute out of your paycheck.
After you’re enrolled, your funds are withdrawn automatically from each paycheck for deposit into your account before taxes are deducted. The total annual election amount is available on day one of your plan year.
Use your FSA debit card to pay for health care expenses.