What’s an FSA and how do I use it?

Who is this for?

Michigan Health Insurance – Customer Service – Health Spending Accounts

Anyone under age 65 who’s employed.

A flexible spending account or arrangement is an account you use to save on taxes and pay for qualified expenses. Other key things to know about FSAs are:

  • Your employer provides and owns the account
  • Only you and your employer can put money in an FSA, up to a limit set each year by the IRS
  • FSAs are a “use it or lose it” account; your employer can keep funds you haven’t used by the end of the year

What makes them flexible? They give employers the most options when deciding on what spending accounts to offer.

Kinds of FSAs

Your employer will tell you which one of these FSAs is available to you.

Enrolling in an FSA

You usually sign up for an FSA once a year during open enrollment. That’s when you:

  • Estimate your expenses for upcoming year
  • See if your employer is contributing any money to the FSA
  • Decide on the total amount you want to put in the account

A portion of that amount is then taken out of your paycheck before taxes throughout the year and put in your FSA.

Funds left over at the end of the year go back to your employer, although they can choose to:

  • Let you pay expenses from the previous year for up to two and half months into the new year
  • Or, carry over up to $500 from one year to the next

Using your FSA

You pay for qualified expenses using:

  • A debit or credit card
  • Your own money and then submitting receipts for reimbursement

When you have a health or limited-purpose FSA, the total amount is available on the first day. For example, if your employer put in $300, and you decided to contribute $600, you have $900 to spend right away. You’d pay back the $600 over the year.

When you have a dependent care FSA, you can only access your account balance. If your employer put in $300, that’s all you have on the first day.

Blue Cross members with a HealthEquity® FSA can manage their FSA through their member account online. After you log in:

  • On the Blue Cross mobile app, look for the health spending account icon on the home screen
  • On our website, look for the health spending account link under My Coverage