How is flexible spending account work

When you have a health or limited-purpose FSA, the total amount is available on the first day. When you have a dependent care FSA, you can only access your account balance. After you log in:. Who is this for? Popular Courses. Part Of. Types of Accounts. How The Accounts Differ. All About Flex Spending Accounts. All About Health Savings Accounts. Tax Considerations. Insurance Health Insurance. A dependent care FSA can pay for summer day camp. All FSA funds must be spent within a specific window of time.

What Is an FSA? Article Sources. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate.

You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy. Funds put into the plan avoid Federal Income Tax, FICA and most state taxes, creating a tax savings for both the employee and the employer.

A Flexible Spending Account FSA is a type of account, provided by your employer, that allows you to put aside money to pay for eligible healthcare and dependent daycare expenses.

The money going into the account is taxfree no payroll tax is withheld which can save you money on items and services you are already purchasing. A healthcare FSA is designated for eligible medical expenses such as copays, coinsurance, deductibles along with things like prescriptions, medical supplies and procedures. Now, over-the-counter medications no longer require a prescription and menstrual care products are eligible expenses. A dependent daycare FSA is designated for expenses incurred to care for your children age 12 and younger, as well as your adult tax dependents who are unable to care for themselves, while you are at work.

Doctor Visits. Cold and Cough Medicine. Menstrual Care Products. Chiropractic Care. Insulin Testing Supplies. Sleep Aids.

Shoe Inserts. Discover all the ways to spend your FSA. Calculate my FSA tax savings. Make your elections Once you choose an annual contribution, your employer will deduct that amount pre-tax in equal parts from each paycheck.

Timing matters You only have one year to spend your FSA money. Limited Election Period Elections can only be made during open enrollment unless you have a qualifying life event, 5 which may include changes to: Employment status Including medical leave. Marital status.