Flexible Spending Accounts
A Flexible Spending Account (FSA) is a tax-advantaged benefit program that allows employees to set aside pre-tax dollars to pay for qualified healthcare and dependent care expenses. FSAs are offered by employers as part of their benefits package. Employees can contribute a portion of their salary to the FSA, reducing their taxable income. The funds in an FSA can be used for a wide range of eligible expenses, such as medical copayments, prescription medications, and certain medical supplies. Dependent care FSAs can be used to cover childcare expenses. It's important to note that FSAs operate on a "use it or lose it" principle, meaning that any funds not spent within the plan year typically cannot be rolled over. However, some employers may offer a grace period or a limited carryover option. FSAs provide individuals with a convenient way to save money on healthcare and dependent care expenses while reducing their overall tax burden.
