Flexible Spending Account (FSA)

What is it? An employee benefit that allows money to be deducted from your paycheck on a pre-tax basis, to pay for qualifying health care and dependent care expenses. A health care FSA can save you substantial sums on a wide range of medical, dental, and vision expenses that are not covered by your firms insurance plan. A dependent care FSA can be used to pay for childcare and eldercare costs. Contributions to your FSA accounts are exempt from federal and in some cases state income taxes. The tax exemption in effect produces savings of as much as 40% or more. You typically can contribute a maximum of $3,000 annually to a health care FSA and $5,000 annually to a dependent care FSA. The catch is that you forfeit any money left in your account at the end of the year, so you must carefully budget your expenses for the year.

Added By: Brian

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