Understanding FSA

A Flexible Spending Account (FSA) is an employer-sponsored benefit that allows employees to set aside pre-tax dollars for eligible medical expenses. FSAs offer a tax advantage, as contributions are deducted from paychecks before taxes are applied, reducing taxable income.

To participate, employees decide how much to contribute for the year, typically up to a maximum limit set by the IRS. Common eligible expenses include copayments, deductibles, prescription medications, dental and vision care, and certain medical supplies. However, FSAs do not cover health insurance premiums.

One key feature of FSAs is the "use-it-or-lose-it" rule: funds must be used within the plan year, although some plans may offer a grace period or allow a small amount to roll over. If funds are not used by the deadline, they revert to the employer.

Employees can enroll in an FSA during open enrollment or after qualifying life events. It's essential to estimate medical expenses carefully to avoid losing money, making FSAs a valuable option for managing healthcare costs efficiently.

Members can connect their HSA to the HealthJoy app to view their balance.