Understand the 5 Most Important Points and 5 Benefits of FSA Accounts.
Do you have a health plan through your job? If you do, and it’s a FSA account – it will probably expire soon!
Your Flexible Spending Account (FSA) can be used to pay for copayments, deductibles, some drugs, and prescription eyeglasses. It can be a great tax savings tool to effectively pay for qualified out-of-pocket expenses, whether related to health care or care for a dependent.
Also known as a flexible spending arrangement, Flexible Spending Accounts ( FSA Accounts) are special accounts – for which you don’t pay taxes as they are pre-tax dollars that you can put away to use for eligible health care products or money you can use to pay out-of-pocket health care costs!
- Flexible spending accounts are generally “use-it-or-lose-it” plans with some exceptions
Understanding FSA accounts:
- Employers may contribute to your FSA, but they are not required to
- FSAs are limited to $2550 per year per employer (if you are married, your spouse can also up to $2550 in an FSA too)
- Generally, the FSA funds must be used within the plan year, BUT employers can give up to 2.5 months extra to use up the funds in FSA —- Or (hopefully) you will be allowed to carry over $500 into the following year.
- At the end of the year or grace period ( if grace periods are available to you), you will lose the money left in your FSA.
- To avoid losing it, use it now or within the grace period if you have that option!
- Based on estimates using data from the 2017 FSA and HSA Consumer Research conducted by VISA, more than $400 million is lost a year in FSA funds as most people (employees) either miss or forget their spending deadlines (). It’s your money — and it’s pre-tax. You should be using it!!
For more than 30 million Americans who have a flexible spending account (FSA), December 31 is not just New Year’s Eve – it’s their last chance to spend their 2018 FSA dollars before they are forfeited to the “use-it-or-lose-it” rule.
Benefits of FSA
- The contributions made by your employer are not added to your income!
- There are no taxes deducted from these funds.
- Following the Qualified medical expenses (so you don’t go outside the list of allowed expenses) will ensure that your withdrawals are tax-free. This list includes prescription eyeglasses.
- You can purchase it for any member of your family. (Tax claimed dependents or spouse)
- Did you know that you don’t need vision insurance to use your FSA dollars on prescription eyewear? And if you have a debit card attached to your FSA, you can enter it at checkout, so you won’t need to deal with submitting receipts or reimbursement paperwork. So, as long as your card has the Visa/MC logo on it, you can use it anywhere those are accepted.
Before the end of the year, take time to look at your insurance and check on your FSA and if you have it:
- Use it before you lose it in most cases
- Get yourself a new pair of eyeglasses!
Learn more on how you can use your FSA account.
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