What's a flexible spending account and how does it work?
Who is this for?
If you’re interested in flexible spending accounts, this information can help you understand more about how they work with your PPO plan.
A flexible spending account, or FSA, is a way for you to set aside money for qualified medical, dental or vision expenses or dependent care.
Your employer owns the account, but you fund it through pre-tax deductions from your paycheck. You get to decide how you want to spend it. This money is available up front and only you and your employer can contribute to it.
You'll get some relief if you lower your taxable income or by making pre-tax money available for qualified medical expenses. You'll put a certain amount into the account. It is then deducted from your pre-tax income, which could put you in a lower tax bracket. And the money you put in isn't taxed, either.
FSAs for you and your family
There are three kinds of FSAs to help your health care costs. Read more about them and how they work below.
What happens to these accounts at the end of the year?
In most cases, your employer may let you roll over any money (up to $500) you have in the account to the following year. This doesn't apply to dependent care.
They could also allow a grace period of up to two-and-a-half months to use the money. Otherwise, the money goes to your employer.