Flexible Spending Account
A flexible spending account (FSA) allows you to deduct a set amount of pre-tax money from each paycheck to pay for certain IRS-qualified out-of-pocket health expenses, such as medical copays, dependent care, prescription drugs, transit, and parking.
Simply use your FSA debit card at the point of sale for services, or file a claim for reimbursement. Since the IRS governs this pre-tax benefit, you can only use your FSA funds for IRS-approved expenses.
- Artificial limbs and teeth
- Contact lenses and contact lens solutions
- Dental treatment and orthodontia
- Fees to doctors
- Guide dog
- Hospital stays and services
- Lactation expenses
- Prescribed medical supplies
- Lodging & transportation for medical care
- Prescription drugs
- Smoking cessation
Download a complete list of eligible expenses, plus a printable summary of the FSA:
Watch this video for a quick overview of the FSA!
Answers to your questions
Questions? We have answers! Here are your most frequent FSA questions.
Q: How does the FSA work?
A:Determine how much you need to cover the year's out-of-pocket health expenses. We withhold that amount from your paycheck pre-tax in equal installments and deposit it into your FSA.
When you have an eligible expense, submit a claim for reimbursement or use your FSA debit card. Save your receipts; you may be required by the IRS to verify expenses.
To participate, you must enroll within 30 days of your date of eligibility or during annual enrollment.
Q: What's the "use it or lose it" rule?
A: The IRS's "use it or lose it" rule requires unused funds to be forfeited at the end of the plan year.
Participants have 90 days from the end of the plan year to file claims for the previous year's expenses. You also have a 75-day grace period at the beginning of the year to continue using the previous year's leftover funds.
You may roll over up to $570 from one year to the next. All other funds unused at the end of the plan year will be forfeited.
Q: Who is eligible for an FSA?
A: Anyone enrolled in a qualified health plan who does not also participate in an HSA (health savings account). Spouses are each eligible for their own individual FSA, up to the maximum allowable election per calendar year.
Q: When is this money available?
A: The FSA is a front-loaded account. This means the funds are available to use at the beginning of the year or on your initial eligibility date. You can use the debit card to pay your provider directly or get reimbursement for claims by direct deposit.
Q: Can I have both FSA and HSA?
A: Although IRS rules state you cannot have both an HSA and FSA in the same tax year, there are exceptions:
- DCA to pay for child care expenses
- LPFSA to pay for dental and vision costs
- Parking and transit commuting FSAs
If you have an FSA and plan to enroll in an HSA next year, up to $500 leftover FSA funds will roll over to an LPFSA that can be used for qualified dental & vision costs along with your HSA.
Q: Can I change my elections any time?
A: You can change your elections only within 30 days of a federally-qualifying event or during annual enrollment. Since this is a pre-tax, front-loaded account, the IRS regulates that the annual election must remain fixed for the entire year. It is important that you calculate your expected health care expenses carefully before election so you do not elect too much or too little.
If your employment ends, you may claim FSA expenses incurred only through the date of your termination. You must submit all claims within 90 days of your termination. Any funds not claimed within that time frame may be forfeited.
Q: What's the annual maximum?
A: The maximum may adjust annually for inflation. For the current maximum, see IRS Publication 969. There is no minimum.
Q: Can I claim mileage?
A: Yes. To claim mileage, show proof you were at a qualifying provider for necessary treatment. Notate round-trip mileage.
The IRS governs how much you can deduct for your tax-deferred savings accounts. Here are the annual limits for each plan:
|FSA for health care expenses||$2,850||$2,750|
|LPFSA for dental and vision expenses||$2,850||$2,750|
|DCA for dependent care||$5,000||$5,000|
|Parking FSA for work-related parking||$270||$270|
|Transit FSA for public transportation||$270||$270|
For the latest, visit irs.gov.
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