What is a Flexible Spending Account (FSA)?

Flexible Spending Accounts (FSAs) are tax-advantaged health spending accounts established by employers. Contributions are made by employees. The benefit to employees is that they can use pre-tax dollars to pay for uncovered qualified medical expenses.

Unlike Health Savings Accounts, these accounts expire at the end of every year, meaning employees must "use it or lose it".

How it works:

• You designate a percentage of your paycheck to be deposited into your pre-tax flexible spending account.
• You submit receipts for your prescriptions, over-the-counter health products and co-payments to your account administrator.
• Your expenses are reimbursed with pre-tax dollars from your flexible spending account.
• You spend less out of pocket!

Legislative Changes Affecting the FSA

• In 2011, you will no longer be able to turn in expenses for over-the-counter drugs unless you have a prescription.
• In 2013, the Health Savings Account have a statutory limit of $2,500.