We are going to be sharing how you can earn more money on your paycheck. A flexible Spending Account, also known as an FSA, is a designated account you put pre-taxed dollars in to pay for certain out-of-pocket eligible expenses. These types of accounts are very popular because of the tax benefit they provide to employers and employees. By enrolling and FSA you can take home more money on your paycheck by lowering your income taxes for expenses you would have incurred anyway.
Here are some of the top questions that employees may have about FSAs:
What types of accounts are offered?
Health Care FSA: Covers eligible medical, vision, dental, and preventive care expenses. This can include deductibles, co-payments, and coinsurance.
Limited Purpose FSA: This program can be used in combination with an HSA and employees can contribute additional dollars for dental and vision expenses.
Post-Deductible FSA: It’s like a Limited FSA but cannot be used until a specified minimum deductible has been met.
Dependent Care FSA: The program covers qualified dependent care expenses, including daycare, preschool, elderly care, and other eligible dependent care. It can only be used it both spouses are working or attending school full-time.
How much can be contributed to an FSA?
FSA’s are limited to $2,750 per employer per year. However, your employer may specify a lower limit. If you are married your spouse may also contribute to an FSA with their employer. Dependent care FSAs have a limit of $5,000 per household.
Does all the money have to be spent by the end of the year?
Generally, all the money must be used within the year. However, your employer may offer two options when it comes to using all of your FSA benefits.
- Some employers may offer a grace period of up to 2 ½ extra months to use all your money from the FSA.
- Some employers may also allow you to carry up to $550 per year to use in the following year (This amount does not go against your employer’s year contribution max).
Can funds from an FSA be used to pay for insurance premiums?
No, your funds from an FSA cannot be used to pay for insurance premiums. You can, however, use them to pay for deductibles, co-payments, coinsurance, and other eligible medical expenses.
How does an FSA save money on taxes?
Employees who have an FSA save money by contributing pre-tax dollars to their FSA. This lowers the amount of their taxable income. Employers also can receive tax benefits when funds are deferred to an FSA.
To learn more about FSAs visit our site at https://www.flex-admin.com/fsa/