A Flexible Spending Account (FSA) (also called a flex plan, reimbursement account, Flex 125, Tax Saving Plan, Medical Spending Account, a Section 125, or a Cafeteria Plan) is an employer-sponsored benefit that allows you to pay for eligible medical expenses on a pre-tax basis.
- FSA reduces your income taxes.
- Your taxable income decreases and your spendable income increases.
- You can use these benefits to save hundreds or thousands of dollars a year.
|Estimated Income Tax Savings|
|Your Annual Contribution||15% Tax Bracket||28% Tax Bracket||31% Tax Bracket|
Note: This example takes into account federal income taxes, FICA (Social Security taxes) at 7.65%, and state taxes at 7% (state taxes will vary).
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How Does a Flexible Spending Account Work?
To begin saving, your employer will ask you how much money you’d like to contribute for the year (limits apply). There is only one opportunity a year to enroll, except in the case of qualified “family status changes” such as marriage, divorce, birth, or loss of a spouse’s insurance coverage.
The amount you designate for the year is taken out of your paycheck in equal installments each pay period and placed in a special account by your employer. When you incur medical expenses not fully covered by your insurance, you submit a copy of the Explanation of Benefits or the provider’s invoice and proof of payment to the plan administrator, who will then issue you a reimbursement check.
What Expenses Are Eligible?
- Most elective surgeries
- Laser vision correction
- Prescription drug co-payments
- Any expense that is considered a deductible medical expense by the IRS and not reimbursed through the FSA
This offer is only available to US residents. Not all employers participate in FSA programs, so it is recommended that you check with your benefits manager to see if your employer participates. It is important to calculate how much money to contribute for the year. If you put in more money than you need, by law, you will not be able to receive it back. For LASIK surgery, we recommend that you have a consultation first to determine candidacy prior to making any allocations to your Flexible Spending Account.