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Overview on Flexible Spending Accounts

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Flexible Spending Accounts Overview

Let’s Talk about Flexible Spending Accounts (FSAs)!

An FSA is an employer-sponsored benefit account that enables employees to set aside funds from each paycheck, before taxes, to help pay for out-of-pocket medical expenses for themselves and their dependents.

Tax Savings

The average FSA participant saves between 30-40% on taxes, when considering Federal, State, and Local taxes, and Social Security contributions.

Flexible Spending Account Contribution Limits

In 2018, participants may elect to set aside a maximum of $2,650.

Flexible Spending Account Plan Types

Flexible Spending Account rules vary by employer. Your employer may choose one of the following:

  • Use it or Lose it – All FSA funds must be spent by the end of the plan year or they are lost
  • $500 Carryover – Any unused funds, up to $500, can be carried over from one plan year to the next
  • Grace Period – Participants get a 2 ½ month grace period after the end of the plan year to use any leftover funds
 

Uniform Coverage Rule

FSA participants can access the full amount of their annual contribution on the first day of the plan year. For example, if you elect $2,000, and on day one you incur a $2,000 medical bill, you can use all of your FSA money to pay for it, even though the money has not accrued in the account. Throughout the rest of the year, deductions will still come at the same rate from each paycheck. However, the available FSA balance will be at zero once all the funds are spent.

Eligible Expenses

Visit the IRS webpage for a list of eligible medical expenses. Contact your Benefits Representative for more details.

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Additional Information about FSAs

For more information about FSAs, check out these blogs from the Captain:

 

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