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Flexible spending account
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A flexible spending account, or flexible spending arrangement (FSA), is a special account one pays into to save up for future out-of-pocket health costs. These accounts are often made as arrangements with an employer, and money deposited into them is tax-free.[1]
Overview
Flexible spending accounts are accounts used to pay for out-of-pocket health costs. These accounts are often made with one's employer, and employers may pay into it as well as the employee, though they are not required to. The money deposited into these accounts is not taxed.[2]
As of 2016, FSAs were limited to $2,250 per year per employer. FSA money could be used to pay for deductibles and copayments, but not premiums. FSA money could be used for account owners, their spouses, and their dependents.[2]
FSA money was generally required to be used within the plan year, and money does not carry over between years. Some employers offered one of two exceptions: a two and a half month grace period, or allowing $500 to carry over. Employers were not allowed to offer both, and were not required to offer either.[2]
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