what is health care fsa

A Health Care Flexible Spending Account (FSA) is a type of savings account that allows you to set aside money on a pre-tax basis to pay for qualified medical expenses. It is an arrangement through your employer that lets you pay for many out-of-pocket medical expenses with tax-free dollars. You decide how much to put in an FSA, up to a limit set by your employer, and you arent taxed on this money. You can use FSA funds to pay for expenses such as insurance copayments, deductibles, qualified prescription drugs, insulin, and medical devices. With an FSA, you submit a claim to the FSA (through your employer) with proof of the medical expense and a statement that it hasnt been covered by your plan. Then, you’ll get reimbursed for your costs. If money is left at the end of the year, the employer can offer one of two options: you get 2.5 more months to spend the left-over money, or you can carry over up to $500 to spend the next plan year. FSAs are sometimes called Flexible Spending Arrangements.