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We've updated one of our most popular materials. See what's new in our guide to MERPs.

A Guide to Flexible Spending Accounts

FSA Frequently Asked Questions

This section answers frequently asked questions (FAQs) about Health Flexible Spending Accounts (FSAs).

How Do I Qualify for a Health FSA?

To qualify for a Health FSA, your employer must offer the benefit and you must elect participation.

How Much Can I Contribute to My Health FSA?Flexible_spending_accounts_questions

In 2015, you may contribute up to $2,550 annually.

How Can I Use My FSA Money?

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.

How Does Health Reform Change FSAs?

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.

What is the Difference between an HRA, HSA, and FSA?

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:

Medical Reimbursement Plans Comparison Chart

How Does a Company Administer a Health FSA?

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.

Learn the differences between HSAs, HRAs, and FSAs