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FSA
(Flexible Spending Account)
An FSA (Flexible Spending Account) is a tax-advantaged U.S. employer-sponsored account for medical or dependent care expenses. Contributions are pre-tax, reducing taxable income.
For 2023, the IRS limits health FSAs to $3,050/year. Funds must be used within the plan year (some employers offer a 2.5-month grace period). Unlike HSAs, FSAs don’t require a high-deductible health plan but are “use-it-or-lose-it.” Eligible expenses include copays, prescriptions, and glasses. FSAs save ~30% on healthcare costs via tax savings. Ideal for predictable expenses like orthodontics or daycare, but require careful planning to avoid forfeiting unused funds.
For 2023, the IRS limits health FSAs to $3,050/year. Funds must be used within the plan year (some employers offer a 2.5-month grace period). Unlike HSAs, FSAs don’t require a high-deductible health plan but are “use-it-or-lose-it.” Eligible expenses include copays, prescriptions, and glasses. FSAs save ~30% on healthcare costs via tax savings. Ideal for predictable expenses like orthodontics or daycare, but require careful planning to avoid forfeiting unused funds.