With the contribution limits set to increase for Flexible Spending Accounts (FSAs) in 2023, now is a good time to debunk any myths that are often associated with FSAs. Here are easy to understand answers to common FSA questions.
Will I lose the money in my FSA if I don’t use it?
Not if you plan properly. You can utilize the carryover option, which allows you to carryover as much as $610 in unused funds from an existing plan to the next.
How is my FSA funded?
It is funded by your employer. Based on how much you decide to contribute (up to $3,100), your employer then places the contributed amount into your account and deducts equal amounts from your paycheck each pay period.
When is my FSA funded?
Your full year’s contribution is available on the first day of the plan year, even though you pay it back through payroll deductions throughout the year. Think of it as an interest-free loan.
Who owns my FSA?
Your employer. However, any unused funds go back to them if you leave the company.
What expenses are eligible for my FSA?
Eligible expenses include out-of-pocket costs not covered by an insurance plan, notably copayments, deductible expenses, coinsurance, and prescriptions. Costs for healthcare products and services are also eligible.