Flexible Spending Account (FSA)

FSAs let you take money from your paycheck, before it’s taxed, to pay for eligible healthcare and dependent daycare expenses. 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.

What is a Flexible Spending Account?

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. By enrolling in a flexible spending account, you may save up to 40% on your healthcare and dependent daycare costs.

What are the Different Types of Flexible Spending Accounts?

A health FSA can be used for eligible medical expenses such as copays, coinsurance, deductibles, dental, vision, prescriptions, medical supplies, and procedures. Even over-the-counter medications and menstrual care products are eligible expenses.

A limited-purpose FSA is for eligible dental and vision expenses only. It allows those with a Health Savings Account (HSA) to use HSA funds for medical expenses and use limited-purpose FSA funds for other eligible expenses such as orthodontia or glasses.

A dependent care FSA can be used for expenses incurred to care for children age 12 and younger, as well as adult tax dependents, who are unable to care for themselves while you are at work.

Add Up Your Savings

FSA participants save by paying for eligible expenses with tax-free money. You can also plan for future expenses by setting aside funds in your FSA to use later. Check out our Tax Savings Calculator, designed to help employees determine how much their savings and spending accounts will save them on taxes.

Am I Eligible for a Flexible Spending Account?

In general, all you need to be eligible for an FSA is to be employed by an employer who offers an FSA. Unlike the HSA, you are not required to have a High Deductible Health Plan. You should not be enrolled in a health FSA if you are contributing to a health savings account (HSA).

Why Should Employers Offer an FSA?

  • Helping your employees with the rising costs of healthcare and childcare is a great way to attract and retain talent. Offering a flexible spending account (FSA) is an easy way to do that.
  • You will save up to 7.65% in payroll taxes on every dollar that the employee contributes.
  • Our expert team works with you to choose the right FSA plan to increase employee satisfaction and benefit everyone financially. We’ll ensure the plan is easy to use and understand.

Find out more about FSAs

Health FSA Eligible Expenses

Limited-Purpose FSA Eligible Expenses