A flexible spending account (FSA) is a powerful tool to help save on health-care costs, tax-free. However, FSAs are often misunderstood. Here are four “fact or fiction” statements for current or future account holders to know about.
- You have to be enrolled in a certain type of health plan to be eligible for an FSA.
- You can only spend up to the amount you have already contributed to your FSA.
- You will lose unused FSA dollars at the end of the plan year.
- You can only adjust your annual FSA election amount during open enrollment.
- In addition to medical expenses, FSA funds can also be used for vision, dental, and prescription expenses, as well as many additional eligible items such as first aid supplies.
- Your entire FSA election amount is available on the first day of the plan year.
- You can roll over up to $570 of unused dollars into the following plan year or receive a 2.5-month grace period after the plan year to use any remaining FSA dollars.
- You can make adjustments to FSA election amount in the case of a qualifying event such as marriage or birth of a child.