This section answers frequently asked questions (FAQs) about Health Flexible Spending Accounts (FSAs).
To qualify for a Health FSA, your employer must offer the benefit and you must elect participation.
In 2015, you may contribute up to $2,550 annually.
You may spend your FSA money tax-free on out-of-pocket medical expenses, such as your deductible, co-payments for medical care and prescription drugs, or bills not covered by insurance such as vision and dental care.
The IRS determines the types of medical expenses you can use tax-free with FSA funds. They are listed in IRS Publication 502.
The Affordable Care Act ("health reform") was signed into law in 2010 and made two key changes to FSAs:
As of 2011, over-the-counter medications are no longer eligible for tax-free withdrawal unless obtained with a prescription (except for insulin).
As of 2013, Health FSA employee salary reduction contributions limited to $2,500 per plan year, with future increases to allow for inflation.
Health Reimbursement Arrangements (HRAs), Health Savings Accounts (HSAs), and Flexible Spending Accounts (FSAs) are all types of Medical Reimbursement Plans. However, each type has different benefits and requirements for employers and employees.
For a detailed overview of the benefits and requirements of HRAs, HSAs, and FSAs see:
Most companies hire a third party administrator to set up and help administer the Health FSA.
Do you have additional questions on Flexible Spending Accounts? Contact us. We’d be happy to help.