Flexible Spending Account
A Flexible Spending Account, also known as flexible spending arrangement is a pre-tax savings account used to pay for medical and health expenses.
It is money you ask to be deducted at the beginning of every Plan Year (you decide how much) from your paycheck and deposited into your FSA for the next 12 months to cover medical costs.
That money you decide to put in a FSA is taken from your pay before your social security, state or federal taxes are deducted.
Decrease your taxable income and
- Increase your take home money after every payday.
- It is a great option when paying for healthcare and other medical expenses
- Healthcare FSA
This will help you pay for the following expenses:
- Prescribed medications
- Doctors’ office visits
- Dental and ocular care
- Laboratory tests and more
Read and check your FSA provider benefits and rules to know what expenses will be covered.
- Dependent-Care FSA
Will help you pay the costs of others while you work:
- Day school or after school care for children under 13 and
- Home care for seniors
You can pay for medical supplies and medications
Children’s orthodontics (braces)
And others specified by your FSA provider
On the first month of every year, you decide how much money you want to have deducted from your paycheck and deposited in your FSA for the next 12 months.
Check your prior years' medical costs in order to have an idea of how much you will need to pay during the course of the year.
The amount you choose to put in your medical FSA account is taken from your monthly paycheck in equal parts and put into your FSA.
You choose to have a year’s deduction total of: $2,400
Divide $2400 by 12, this will give you your monthly payments. So, $2,400 / 12 months = $200 per month
That total amount per year you choose to pay will be available on the first day your benefits become ACTIVE (on the first month you started paying for the plan).
You can immediately begin using the entire $2,400 (in this example) for medical costs.
You can only use the amount of money you have been deducted up until that point.
You will be able to access a website assigned for you from your plan provider and check everything regarding your FSA details.
Before December 31st, you need to ask your FSA provider for a grace period so that you can be given until March 15 to spend that FSA money.
That is why you need to be extra careful with your estimates before you start any FSA plan.
Remember that if you do not notify your provider about your leftover FSA money when the 12 months are over, you will not get that money back. Either you use it or you lose it if so make sure to ask for the extension.
- You can pay online, or with a Debit or Credit Card. That will depend on each provider’s rules and benefits.
You will only be able to pay for FSA eligible expenses.
You will pay out of your pocket
Then send a copy of your receipt to your FSA provider
And your provider will issue a check to pay you back.