An FSA (flexible spending account) is a company-sponsored healthcare plan that allows employees to set aside up to $2,750 per year (2021) to meet eligible medical expenses. It’s similar to a savings account, but it’s just for approved health-care expenses. FSAs are funded through pre-tax payroll deductions and operate on an annual plan year basis.
Any funds left over at the end of each plan year are lost to the account holder’s employer. That means if you don’t spend all of your money before the deadline, you’ll lose it, so keep track! However, certain accounts may have a chance of survival because employers can offer an FSA Grace Period.
Most accounts provide online benefits portals and even offer FSA cards to cover health expenses.
Click here for a guide to use your FSA card.
What is an FSA Grace Period?
This allows account holders to spend their remaining FSA funds for up to 2.5 months after the conclusion of their plan year, while the $550 rollover allows employees to move up to $550 into the following year’s account.
However, they’re not included in all plans. Ask your HR department if you’re unsure when you’ll need to use your money.
What can I use my flexible spending account for?