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.
The average FSA participant saves between 30-40% on taxes, when considering Federal, State, and Local taxes, and Social Security contributions.
In 2019, participants may elect to set aside a maximum of $2,700.
Flexible Spending Account rules vary by employer. Your employer may choose one of the following:
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.
Visit the IRS webpage for a list of eligible medical expenses. Contact your Benefits Representative for more details.
For more information about FSAs, check out these blogs from the Captain: