FSAs are a great way for you to take advantage of a pre-tax benefit offered by your employer and save on out-of-pocket health care costs. With an FSA, you can pay for eligible expenses such as doctor’s office copays, prescription drugs, eyeglasses, eligible over-the counter products and much more with your pre-tax income. By taking advantage of your FSA, you can:
- Reduce your taxes
- Increase your take home pay
- Pay for rising health care expenses with pre-tax dollars
With health care costs continuing to rise year after year, why wouldn’t you participate?
Let’s start with the definition of FSA. Quite simply it stands for Flexible Spending Account and it can be an indispensable part of your overall benefits program. Here’s how it works: an FSA is an account your employer sets up so you can pay for a variety of health care needs like insurance copays, deductibles, specific over-the-counter health care products and even some dental and vision costs. But here’s the best part: your FSA is funded entirely by your pre-tax income so you can save money and offset rising health care costs. And the more dependents you have, the greater your savings! Here’s another way to look at an FSA: by setting aside health care funds pre-tax, you can increase your savings and ultimately your spending power. Below is an example of the tax savings you could enjoy by taking advantage of an FSA.
Although your FSA will be deducted through your payroll, you will have access to your entire FSA contribution on the first day of your plan. That means you can cover all your health care costs without waiting to accumulate funds throughout the year.
You can also plan for large health care expenditures, like surgery, because you choose how much to put into your FSA account. In addition, some employers may offer a plan extension that allows you to continue to spend unused FSA funds for an additional period of time after the plan year ends.