Skip to main content
Back to Category

Flexible Spending Account (FSA)

A flexible spending account (FSA), sometimes also known as a flexible spending arrangement, is a special account that employees can set aside to help save money on health care expenses that would otherwise be paid for out-of-pocket. The IRS allows employees to contribute up to $2,700 per year to their FSA, based on pre-tax dollars. If an employer offers matching FSA funds, they can contribute up to $500 more. Unused funds generally do not roll over, so it may behoove employees to use up as much as to pay for qualified expenses before the end of a health care plan year.

FSA eligible expenses include:

  • Medical expenses - Employees can use a health care FSA to pay for a variety of medical and dental expenses, including less-obvious items like vision exams, first-aid supplies, birth control, and insurance premiums.
  • Dependent care - FSA funds can be used to cover dependent care expenses such as preschool, day care, camps, and before- and after-school programs.
  • Medications - Flexible spending account funds can be applied to purchases of prescription medications, as well as over-the-counter medications prescribed by a doctor.

It should be noted that an FSA is similar to a health savings account (HSA). The key difference is that an HSA is available only to employees or self-employed workers with high-deductible health insurance policies and does not cover dependent care.

Preparing for open enrollment? Take a look at our open enrollment checklist or read about Ascentis HR & Benefits.

Looking for HR tools and resources?

Streamline your processes with Ascentis

Learn More

Other terms:

What Is Performance Management?

Performance management is the process of developing strategi... See more

Attendance Management System

An attendance management system refers to an organization's ... See more

Workforce Scheduling

Managing employee schedules is often a deceptively difficult... See more

Sign up for a free demo today