Do you have the option to open a flexible spending account (FSA) at your job? If so, take full advantage of it! These accounts are a valuable employer-offered benefit that can help you save on qualified medical expenses. But how does a FSA work? There are many ways to take advantage of an FSA, but few know how to get the most out of these accounts. Here's what you need to know about FSAs.
FSAs are accounts that you can put pre-tax dollars into. Your employer can also fund the FSA, but those details vary from one company to the next. You don't pay taxes on your contributions; If you use that money on qualified medical expenses, you won't pay taxes on withdrawals.
You can only use an FSA on certain medical expenses. That includes doctor's visits, medical procedures, prescriptions, insurance deductibles, etc.
Know Your Deadlines
One of the most important things you should know to use your FSA to its full potential is the expiration deadlines. Unlike health savings accounts (HSAs), FSAs don't roll over into the next year. That means you only have a certain period to use the funds in your FSA. After that point, you're out of luck!
Some plans have grace periods and carryover policies. Familiarize yourself with those details to know when to use your FSA.
Understand the Eligible Expenses
The IRS dictates what counts as an eligible expense. That list of qualifying expenses is bigger than you think! In addition to obvious healthcare costs, you can use your FSA to pay for things like family planning products, menstrual care, acne medications and more.
Read up on what you can use your FSA for. Many drugstores have specific FSA sections or shelf labels to help you understand what products are eligible for FSA coverage and what isn't. Use that information to your advantage. There's a good chance that you can pay for the care and comfort products you use every day with your FSA.
Read a similar article about FSA here at this page.
