What is a Flexible Spending Account for healthcare?
“To sum it up…”
- A flexible spending account is an account that allows you to put money away tax-free to use for your out of pocket healthcare expenses
- Your employer may contribute to your flexible savings account but they are not required to
- The maximum amount allowed in your employer flexible spending account is $2,600
- You cannot use a flexible spending account with a marketplace plan but you can use a health savings account
How does a flexible spending account work?
A flexible spending account is a type of account used specifically for out-of-pocket health care costs. You do not have to pay taxes on the money that you put into this account. Some employers may contribute money to this account to help you offset the costs of your medical expenses but they are not required to even if your company offers one.
To get all the information you need to know about your employer’s specific flexible spending account options, you should speak to your human resources representative. Even if your company offers flexible spending account options to employees, it is not a requirement that you enroll in the program.
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To get all the information, you need to know about your employer’s specific flexible spending account options, you should speak to your human resources representative. Even if your company offers flexible spending account options to employees, it is not a requirement that you enroll in the program.
There are some rules that apply to all flexible spending accounts regardless of the company that offers them. Flexible spending accounts are limited to a maximum amount of $2,600 per employer per person. However, if you are married and your spouse’s employer also offers a flexible spending account, they are also eligible to have $2,600 in their FSA.
There are some restrictions on what you can spend your flexible spending account money on. You are permitted to use the money for out-of-pocket payments such as deductibles and copayments.
However, you cannot use it to pay for your monthly premiums. You must cover those payments on your own. You can also use the money to pay for prescription medications that are not fully covered by your insurance.
Additionally, you can use it for over the counter medications even if your doctor did not write you a prescription for them. You can also be reimbursed for insulin even if you do not have a prescription for that medication.
You are also able to use your flexible spending account for medical equipment and dental expenses. Medical equipment that can be covered by your flexible spending account includes crutches, blood sugar test kits, bandages, and hearing aids.
How long does my flexible spending account last?
Typically, you must use all the money in your flexible spending account within one year. However, some employers offer other options that allow you to take more than a year to spend the money. You might be offered a short period of time of up to two and a half months after the year is over to spend all of the money that is still left.
You might also have the option to carry $500 over into the next year. Your employer does not have to offer either of these options but if they do, they can only offer one or the other. You will lose the money in your account when the year is up or when those additional months have ended.
What is a health savings account?
You are not allowed to use a flexible spending account with a plan from the Healthcare Exchange Marketplace. However, they do offer a Health Savings Account, which is similar to a flexible spending account. A health savings account allows you to set money apart in an account that will not be taxed but only if you have a high deductible plan from the Marketplace.
High Deductible Plans often have less expensive monthly premiums but you are not allowed to use the account money to cover premiums. You can use the money to cover deductibles, co-pays, and other medical expenses.
You will not lose the money in your health savings account if you do not spend it all within a yearly time frame. You can set it up at your own bank and keep the money even if you get a new job. You can even earn interest on your health savings account.
What is a flexible spending account for healthcare?
A flexible spending account allows you to put money aside for your healthcare needs that will not be taxed. You cannot use a flexible spending account with a marketplace plan but can use a similar account known as a health savings account.
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