A Flexible Spending Account, or FSA, is an employer-sponsored arrangement that provides employees with an opportunity to set aside a portion of the employees’ earnings on a pre-tax basis for the sole purpose of paying qualified medical expenses. An FSA can be used along with any traditional health insurance plan and has tax advantages.*
Some Facts About Flexible Spending Accounts
- Earnings deducted for FSA contributions are not subject to payroll taxes.*
- There are several types of Flexible Spending Accounts designed to cover different types of health care costs.
- Medical FSAs can be used to pay for deductibles, copayments and coinsurance specified in a health plan.
- Debit cards can be used with certain FSA plans; these are called Flexcards.
- The Internal Revenue Service (IRS) sets annual limits to how much you can fund a Flexible Spending Account.