{"id":2361,"date":"2018-02-20T22:58:47","date_gmt":"2018-02-21T03:58:47","guid":{"rendered":"https:\/\/www.singlecare.com\/blog\/?p=2361"},"modified":"2020-11-16T13:09:57","modified_gmt":"2020-11-16T18:09:57","slug":"flexible-spending-account-fsa-changes","status":"publish","type":"post","link":"https:\/\/www.singlecare.com\/blog\/flexible-spending-account-fsa-changes\/","title":{"rendered":"Flexible Spending Account (FSA) 101: What you need to know"},"content":{"rendered":"

Even when you have health insurance, sometimes there are expenses that aren\u2019t covered (also known as out-of-pocket expenses)\u2014and those healthcare costs can be expensive. A flexible spending account (FSA) is one option available for people who have insurance through their employers. Here, learn everything you need to know about flexible spending accounts\u2014what they are and how they can benefit you.<\/span><\/p>\n

What is an FSA?<\/span><\/h2>\n

A <\/span>flexible spending account<\/span><\/a>, sometimes called a flexible spending arrangement, is a special savings account where you can deposit pretax money. Meaning, you don\u2019t pay income taxes to the IRS on any amount you put into the account.\u00a0<\/span><\/p>\n

The two most common types of FSAs are:\u00a0<\/span><\/p>\n

    \n
  1. Healthcare or medical FSAs: <\/b>Use these accounts for medical, dental, and vision expenses that are not covered, or are only partially covered by your insurance.<\/span><\/li>\n
  2. Dependent care FSAs: <\/b>Use these accounts to offset the cost of nursery school, daycare, after-school care, or elder care programs for qualified dependents. You must pay for these expenses first and then submit for reimbursement.<\/span><\/li>\n<\/ol>\n

    Some employers also choose to offer two other types of limited purpose FSAs, but they are less common:<\/span><\/p>\n

      \n
    1. Individual premium reimbursement FSAs:<\/b> Use these accounts to pay for non-employer sponsored medical premiums for you, spouse, or eligible dependents, such as individual dental\/vision premiums, accident\/disability premiums, cancer insurance premiums, or hospital indemnity coverage.<\/span><\/li>\n
    2. Adoption assistance FSAs:<\/b> Use for reimbursement of reasonable and necessary expenses that you incur in the process of legally adopting a child.<\/span><\/li>\n<\/ol>\n

      Participation in one type of FSA does not have any bearing on participation in another type, but may affect your eligibility to participate in a <\/span>health savings account (HSA)<\/span><\/a>.<\/span><\/p>\n

      How does an FSA work?<\/span><\/h2>\n

      FSAs are a great way to cover necessary expenses and to get a tax break along the way. But, there are rules about the money you save there, such as who can contribute, how much, and what you can spend the money on.\u00a0<\/span><\/p>\n

      Contribution limits<\/span><\/h3>\n

      FSA accounts are only available through employers; some elect to contribute to their employees’ FSAs, but this is not required. For healthcare FSAs, in 2020 you can contribute a maximum of $2,750 annually, but that amount changes each year. For dependent FSAs, the annual total household maximum contribution is $5,000.<\/span><\/p>\n

      Rollover rules<\/span><\/h3>\n

      In most FSAs, money not used by the end of the year is lost, so it is vital to plan how much you want to contribute based on estimates of what you think you will spend. There are exceptions to the use it or lose it rule, according to Kevin Haney, President of<\/span> Growing Family Benefits<\/span><\/a>. “Some companies can elect to offer one of two possible get-out-of-jail-free alternatives,\u201d he says. These include:<\/span><\/p>\n