Flexible spending account (FSA)

An FSA is an account you set up to pay your medical costs. You need to have a job to set up an FSA. The money that you put in an FSA comes straight from your paycheck before you pay taxes. By saving money on your taxes, you're saving a bit on what you spend for health care.

When you sign up for your health plan during open enrollment, you decide how much money you want taken out of your paycheck to go into your FSA. You can put a maximum of $750 in your FSA.

You can use money in your FSA for copays, deductibles, prescription medicines, and medical devices. You can now use your FSA to pay for over-the-counter medications, even if they have not been prescribed by a physician, as well as menstrual care products.Unfortunately, if you don’t use all the money in your FSA by the end of the year, you may lose it. Some employers allow a 2 1/2 month grace period for you to use your FSA funds from the previous year or allow you to carry over up to $500. Employers can offer one of these options, but not both and do not have to allow either.

WebMD Medical Reference Reviewed by Sarah Goodell on June 21, 2021
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