In plain words
A flexible spending account lets you set aside some pre-tax pay for medical costs. Many people use it for copays, prescriptions, and some supplies. A dependent care version can help pay for childcare. Many accounts require you to choose how much to set aside during open enrollment, and the choice often applies for the whole plan year. The rules differ by plan. Some accounts let you spend funds for a few months after the plan year ends, and some do not. Changes to the amount may be allowed after a life event, such as a birth. An employer's benefits office publishes each plan's dates and deadlines, and plans may ask for receipts.
The deeper version
A health FSA is an employer-sponsored, IRS-regulated arrangement under Internal Revenue Code section 125 that reimburses qualified medical expenses with pre-tax salary reduction. The use-or-lose rule applies to most FSAs, with optional grace periods of up to two and a half months and carryover options permitted in some plans. Election changes mid-year are permitted for qualifying life events such as birth or adoption, subject to plan terms. Dependent care FSAs are subject to separate annual limits set in federal law. The IRS guidance in Publication 969 (Health Savings Accounts and Other Tax-Favored Health Plans) describes qualifying expenses and rules.
Where it comes up
- What insurance usually covers: pumps, lactation visits, pelvic floor PTCalifornia: Leave, Money, and Paperwork
- Birth certificate, Social Security, and adding the baby to insuranceCalifornia: Leave, Money, and Paperwork
- Medi-Cal, Covered California, and insurance in pregnancyCalifornia: Leave, Money, and Paperwork
What mothers here say about flexible spending account
No one has posted under this term yet.
Sources
- Internal Revenue Service — Publication 969: Health Savings Accounts and Other Tax-Favored Health Plans