Understanding Savings Accounts:
Everything you need to know about Health FSAs
A Health Flexible Spending Account (FSA) is a pre-tax savings account that can be used for out-of-pocket healthcare expenses, such as medications and copayments.
The money you put in your FSA is taken from your pay BEFORE federal, state or social security taxes. This decreases your taxable income and increases your take-home pay. When choosing your benefits, you must decide how much money you want to put in your FSA for the entire year – although there are limits. The amount you choose for the year is taken out of your paycheck in equal amounts and placed in your FSA. Most FSAs offer a debit card so you can conveniently use the funds in your account. Finally, unused funds over $500 in your health FSA will expire at the end of the year, so plan accordingly.