Flexible Spending Accounts
Flexible Spending Accounts (FSAs) allow you to pay for eligible health care and dependent care expenses using tax-free dollars.
There are three types of FSAs — the Health Care FSA, the Limited Purpose FSA, and the Dependent Care FSA.
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Health Care FSA |
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Limited Purpose FSA |
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Contribute up to $3,050 per year, pretax to pay for services not covered by your medical, dental or vision plan such as copays, coinsurance, deductibles, prescription expenses, lab exams and tests, contact lenses and eyeglasses. |
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Used if you are enrolled in the HDHP with medical plan; it works the same way as the standard Health Care FSA; however, you may only use it to pay for eligible vision and dental expenses. Contribute up to $3,050 per year, pretax. |
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Receive a debit card to pay for eligible medical expenses (funds must be available in your account). |
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You must submit claims and be reimbursed if you enroll in this FSA; no debit cards are provided. |
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Eligible expenses include medical copays, coinsurance, deductibles, eyeglasses, over-the-counter medications prescribed by your doctor. |
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Eligible expenses include dental and vision copays, coinsurance, deductibles, eyeglasses and over-the- counter medications prescribed by your doctor. |
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Submit claims up to March 31 of the following year for expenses from January 1 to December 31. |
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Submit claims up to March 31 of the following year for expenses from January 1 to December 31. |
Important: If you are a participant in a Health Savings Account (HSA), you are not eligible for the Health Care FSA reimbursement account.
Dependent Care FSA
- Contribute up to $5,500 per year, pretax, or $2,500 if married and filing separate tax returns to pay for day care expenses associated with caring for elder or child dependents that are necessary for you or your spouse to work or attend school full-time.
- Can only be used to pay for eligible dependent care expenses including day care, after-school programs and elder care programs and you cannot use your Health Care FSA to pay for Dependent Care expenses.
- Submit claims up to March 31 of the following year for expenses from January 1 to December 31. Note: If you do not spend all the money in this FSA by March 31, per IRS regulations, unused dollars will be forfeited for pretax contributions.
How Much Could You Save?
Here’s an example. Let’s say Tom decides to set aside $2,000 in an FSA for the year. Normally, on that money, he’d pay $560 in federal income tax, $100 in state income tax, and $153 in FICA tax. So, by contributing that $2,000 to his FSA, he’ll get an $813 tax savings for the year.
| Without the FSA, Tom would pay … | Savings |
| 28% in federal income tax | $560 |
| 5% in state income tax. | $100 |
| 7.65% in Federal Insurance Contributions Act (FICA) tax | $153 |
| His total tax savings for the year with an FSA | $813 |
This hypothetical illustration is for educational purposes only. Dollar amounts or savings will vary depending on income, state and city tax rules, and other factors. Please consult a tax, legal, or financial advisor about your own personal situation.