Flexible Spending Account

Benefits

A US tax-advantaged account that allows employees to set aside pre-tax dollars for eligible medical or dependent-care expenses, subject to annual limits and use-it-or-lose-it rules.

## Flexible Spending Account (FSA)

An FSA lets employees pay for qualifying expenses with pre-tax dollars, reducing their taxable income.

### Types and Limits (2025)

| Type | Annual Limit | Eligible Expenses |
|------|-------------|-------------------|
| Healthcare FSA | $3,300 | Medical, dental, vision copays, prescriptions |
| Dependent Care FSA | $5,000 | Daycare, preschool, elder care |
| Limited Purpose FSA | $3,300 | Dental and vision only (for HSA holders) |

### Use-It-Or-Lose-It

FSA funds generally must be used within the plan year. Employers may offer one of:
- **Grace period**: 2.5 extra months to use funds.
- **Carryover**: Up to $640 can roll to next year.
- **Neither**: Funds are forfeited.

### Tax Savings

An employee in the 22% federal bracket + 7.65% FICA who contributes $3,300 saves approximately $978 in taxes.

Flexible Spending Account

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