Flexible Spending Accounts (FSA)

Flexible Spending Accounts (FSA)

A Flexible Spending Account (FSA) allows employees to set aside pre-tax dollars for qualified medical and dependent care expenses, reducing taxable income and out-of-pocket costs. FSAs are particularly useful for employees who anticipate predictable healthcare or childcare expenses throughout the year.

Types of FSAs Employers Can Offer

Healthcare FSA

Covers out-of-pocket medical, dental, and vision expenses, including copayments, deductibles, and prescription drugs.

Dependent Care FSA

Helps employees pay for eligible childcare, elder care, and after-school programs while they work.

Key Benefits of an FSA

Immediate access
Convenience
Tax savings

Important Note

FSAs follow a “use-it-or-lose-it” rule, meaning funds must be spent within the plan year unless an employer offers a grace period or limited carryover option.
By incorporating an FSA option, businesses help employees manage healthcare and dependent care costs efficiently while maximizing tax advantages.