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.  


  1. You have to be enrolled in a certain type of health plan to be eligible for an FSA.
  2. You can only spend up to the amount you have already contributed to your FSA.
  3. You will lose unused FSA dollars at the end of the plan year.
  4. You can only adjust your annual FSA election amount during open enrollment.


  1. 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.
  2. Your entire FSA election amount is available on the first day of the plan year.
  3. 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.
  4. You can make adjustments to FSA election amount in the case of a qualifying event such as marriage or birth of a child.

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Understanding IRS Rules: The Importance of Substantiating Health FSA and DCAP Claims

Understanding IRS Rules: The Importance of Substantiating Health FSA and DCAP Claims

Introduction In the realm of cafeteria plans, health Flexible Spending Accounts (FSAs) and Dependent Care Assistance Programs (DCAPs) play a ...

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