What Is a Health Care Spending Account?

Health care spending accounts (FSA, FSA) are employer-sponsored plans that enable employees to save pre-tax dollars to cover medical and dependent-care costs that fall outside their insurance’s coverage, tax free when used towards qualified expenses like copayments, coinsurance payments or prescription costs – however there may also be other expenses eligible for reimbursement.

Maxine and her family visit their doctor frequently due to George’s allergies, knee surgery and dental and vision exams for her children. Maxine utilizes an FSA and contributes $2,400 annually in anticipation of out-of-pocket medical costs; that money becomes immediately accessible on Day One of each year (using either its grace period or rollover feature – saving 30 cents on every dollar spent!). Maxine saves 30 cents with every purchase thanks to the FSA’s use-it-or-lose-it rule (which can be extended with either grace period extension or rollover).

FSAs can be invaluable tools for those with high-deductible health plans, helping reduce out-of-pocket expenses before reaching their insurance plan deductible. While FSA and HSA rules can differ slightly, it’s essential that you determine which account best meets your needs before contributing any money to either one.

An employee’s decision between an FSA and HSA depends on their employer’s health plan options and whether or not there is an HSA option with high deductible coverage. Below is a table detailing these accounts to assist you in making an informed choice about which is the right option for them.

The first column highlights expenses that can be reimbursed from an FSA, such as dental and vision exams, contact lens solutions and over-the-counter medicines such as cough syrup and allergy pills. In comparison with an HSA, an FSA provides more benefits such as higher contribution limits and the option of carrying over funds into future years.

If your employer offers a high-deductible plan, you may be eligible to participate in both an FSA and HSA simultaneously. Furthermore, limited purpose FSAs may also be beneficial in covering expenses not eligible for reimbursement under either one.

Start off right by visiting FSAFEDs website to understand more about FSAFEDS program and determine your eligibility, or download their app to manage and submit receipts on-the-go! And remember – open enrollment season has officially kicked off!

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