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FSA for Employees

What is FSA?

A flexible spending account (FSA), also known as a flexible spending arrangement, is one of a number of tax-advantaged financial accounts that can be set up through a cafeteria plan of an employer in the United States.

An FSA allows an employee to set aside a portion of earnings to pay for qualified expenses as established in the cafeteria plan, most commonly for medical expenses but often for dependent care (DCAP) or other expenses.

A flexible spending account is a great tool to use in conjunction with your health insurance. Ask your employer about starting yours today!

FSA - Pre-Tax Savings

The biggest benefit of a flexible savings account is that you can save money from your paycheck for the account, without paying taxes on it. Similar to a 401k, you can set a predetermined percentage of your paycheck to go to your flexible savings account. This way, it doesn’t seem like as big of a hit to your paycheck each period. This allows you to accumulate money quickly in your FSA account.

Calculating your 2013 FlexSystem election?

New healthcare regulations impose a $2,500 limit for medical Flexible Spending Account contributions. Is your annual Flexible Spending Account election for medical expenses usually more than $2,500? A new law will cap your contribution at $2,500 starting January 1, 2013. But if your spouse’s employer has an FSA and your spouse is eligible, your spouse can contribute $2,500 as well.┬áThat’s good news for families expecting large medical expenses!

Medical Expense FSA

A flexible spending account designed to save for medical expenses is the most common form of FSA. This type of account allows you to save money on a pre-tax basis for qualified health care expenses. This is common because it allows you to save money for your deductible and coinsurance costs. Depending on your health insurance plan, this can amount to a big cost.

In addition to paying for things like deductibles and co-pays, a medical expense FSA can pay for some other expenses as well. For example, you can pay for dental or vision care even if your insurance plan does not cover these things. You can also buy over-the-counter drugs and first aid kits with funds from your FSA as well.

Dependent Care FSA

Another common type of flexible spending account is the dependent care FSA, also called DCAP. A dependent care FSA allows you to spend the money from your account on qualified care expenses for your dependents. The most common form of this is paying for child care. However, it can also apply to adult day care as well. Therefore, if you take care of an older relative who is living with you, you can use this account to fund their care. It does not apply to nursing homes, however.

How to Use Your FSA

Once you have the flexible spending account set up, it is extremely easy to use. You can usually access the funds in one of two ways. You can file a claim for the money which involves completing some paperwork. Or you can use an FSA debit card. A debit card is by far the easiest method to access the funds as you don’t have to keep up with receipts or file any paperwork. The money is automatically transferred to who it needs to go to and you go on about your business.

SAVE all of your receipts from purchases made with your FSA debit card:

  • Receipts may be requested for any and all purchases made with your debit card.
  • IRS has strict requirements for substantiation of eligible purchases made with the debit card.
  • Receipts must include the date of service, type of service, provider name and the amount charged.

Here is a convenient way to use your FSA:

FSAStore

Medical Expense FSA FAQs

FSA FAQs Do you have more Medical Expense FSA questions?

<<< Click the button for more information.

Dependent Care FSA / DCAP FAQs

DCAP FAQs Do you have more Dependent Care FSA / DCAP questions?

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