How To Guide For: A Look At Flexible Spending Accounts -- How Does It Work
A health flexible spending account (FSA) is a plan that lets you use pre-tax dollars to pay for eligible health care expenses for you, your spouse, and your eligible dependents throughout the plan year. How does an FSA work. Money is taken out of your paycheck before taxes and placed into an account. Setting aside pre-tax dollars means that you pay fewer taxes and increase your take-home pay. You can either submit receipts for reimbursement or you will get a debit card with your flexible spending account, which is technically a debit card that takes the money directly out of the account for the expenses. This eliminates the need to get approval prior to or after purchase in most instances. Flexible Spending Accounts are not for every expense, and the card can only be used for eligible expenses. Eligible expenses can be reimbursed under the FSA. Eligible health FSA expenses are those that you pay for out of your pocket for medical care that’s provided to you, your spouse, and eligible dependents. Generally, IRS rules state that medical care includes items and services that are meant to diagnose, cure, mitigate, treat, or prevent illness or disease. These expenses are defined by IRS rules and your employer’s plan. Flexible Spending Account withholding arrangements are renewed on an annual basis. So if you have money in the account make sure you use it within that year or you will lose it. It does not rollover. To get more information on Flexible Spending Accounts and how it works click the pictures below to read the articles.