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People with coverage through a job

Using a Flexible Spending Account (FSA)

If you have a health plan through a job, you can use a Flexible Spending Account (FSA) to pay for health care costs, like
,
,
, and some drugs. They can lower your taxes.

How Flexible Spending Accounts work

A Flexible Spending Account (FSA, also called a โ€œflexible spending arrangementโ€) is a special account you put money into that you use to pay for certain out-of-pocket health care costs.
You donโ€™t pay taxes on this money. This means youโ€™ll save an amount equal to the taxes you would have paid on the money you set aside.
Employers may make contributions to your FSA, but they arenโ€™t required to.
With an FSA, you submit a claim to the FSA (through your employer) with proof of the medical expense and a statement that it hasn't been covered by your plan. Then, youโ€™ll get reimbursed for your costs. Ask your employer about how to use your specific FSA.
To learn more about FSAs:

Facts about Flexible Spending Accounts (FSA)

  • They are limited to $3,200 per year per employer. If youโ€™re married, your spouse can put up to $3,200 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 youโ€™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.
    • Get a list of generally permitted medical and dental expenses from the IRS.
  • You canโ€™t use a Flexible Spending Account with a Marketplace plan.
    • Instead, a similar product, called a
      , allows you to set aside money on a pre-tax basis to pay some health expenses if you have a โ€œhigh deductibleโ€ Marketplace health insurance plan. Learn more about Health Savings Accounts.

FSA limits, grace periods, and carry-overs

You generally must use the money in an FSA within the plan year. But your employer may offer one of 2 options:
  • It can provide a "grace period" of up to 2 ยฝ extra months to use the money in your FSA.
  • It can allow you to carry over up to $640ย per year to use in the following year.
Your employer doesnโ€™t have to offer these options. If it does, it can be either one of these options, but not both.
Warning:
Plan ahead
At the end of the year or grace period, you lose any money left over in your FSA. Donโ€™t 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.

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