Flexible Spending Account

Annual Max Contribution

$3,200

Use it or Lose it Policy / Grace Period

Up to $610 rollover from 2023 to 2024
Up to $640 rollover from 2024 to 2025

A general-purpose Health FSA can be used to pay for qualified out-of-pocket health care costs. Because the money you contribute to an FSA isn’t taxed, you can reduce your overall healthcare expenses.

You need to incur all expenses prior to the end of the plan year. Requests for reimbursements need to be filed before the end of the claims filing deadline for your plan, typically 75 days after the end of the plan year. Check with your employer for the exact date.

Your employer may also offer you a grace period OR a carryover option. If your employer offers you a grace period, you have an additional 2½ months after the end of the plan year to incur expenses. If your employer offers you the carryover option, you may carry part of your balance into the next plan year.

An FSA is sponsored by your employer as one of your employee benefits. FSAs can be offered with any type of health plan (unlike Health Savings Accounts).

Note: You cannot contribute to an HSA and a general purpose FSA at the same time.

The list of reimbursable medical, dental, and vision costs is surprisingly broad, defined by the IRS in Publication 502. These are just some examples:

Acupuncture
Addiction Treatment
Ambulance
Bandages
Birth Control Pills, Vasectomy
Breast Pump
Capital Expenses (like door ramps)
Chiropractor
Dental Treatment
Disabled Dependent Care
Eye Exam, Eyeglasses, Contact lenses, Eye Surgery
Fertility Enhancement
Hearing Aids
Nursing Home/Services
Prescriptions
Psychiatric Care
Special Education
Transportation Costs for Medical Care

Ineligible Expenses

Cosmetic or elective surgery
Personal trainers
Marriage or career counseling

The amount you contribute to a health FSA is not subject to federal income tax or social security (FICA) tax—effectively adjusting your annual taxable salary. The taxes you pay each paycheck and collectively each plan year can be reduced significantly.

An FSA is an employer-owned account. If you leave your employer, you cannot take an FSA with you.
An FSA can complement any health plan.
Your employer takes money out of your paycheck, before the money is taxed (pre-tax), and puts it into your account. Your employer may also contribute to your FSA.
FSA funds can be used to pay for qualified medical expenses during the plan year. Your entire annual FSA election amount is available on day one of your plan (even if you haven’t yet contributed the full amount to the account).
Typically, you must use all money in an FSA within your employer’s plan year (known as “use it or lose it”).

Dependent Care Flexible Spending Account

Max Individual Contribution for Married but filing as separately

$2,500

Max Married Contribution for Filing Joinly or Single Parent As Head

$5,000

A Dependent Care Flexible Spending Account (also known as Dependent Care Assistance Program) is an employer-owned, tax-advantaged spending account that you can use to pay for qualified child and elder care expenses while you’re working, looking for work, or attending school full-time.

You need to incur all eligible dependent care expenses prior to the end of the plan year. Requests for reimbursements need to be filed before the end of the claims filing deadline for your plan, typically 75 days after the end of the plan year. Check with your employer for the exact date.

The IRS contribution limit: $2,500 if married and filing separately; $5,000 if married and filing jointly or filing as single/head of household.

You can use funds from a DCFSA for eligible expenses related to care for your child (under age 13), disabled spouse, elderly parent, or other qualified dependent who is physically or mentally incapable of self-care.

NOTE: When filing jointly, the IRS requires both spouses have W-2 earned income during the year.

Dependent care FSA-eligible expenses are defined by the IRS in Publication 503. A few examples include:

Licensed nursery schools
Qualified childcare centers
Adult daycare
Child daycare
Late fees (for late pick up)
After-school care
Au pair fees
Babysitter (work related)
Summer day camps
Preschool tuition

The amount you contribute to a DCFSA is not subject to federal income tax or social security (FICA) tax—effectively adjusting your annual taxable salary.

When you have a DCFSA, you must report this information as part of your tax return.
Generally, if you have a dependent care FSA you can’t also take the full Dependent Care Tax Credit. You should talk to your tax adviser to learn which option is best for you.
A DCFSA is not portable if you change companies or terminate employment.
DCFSA funds do not rollover year after year so you need to use it or lose it.
At the end of the calendar tax year, a DCFSA has a 2.5 month “run out” period to submit claims for expenses incurred during the previous year.

Flexible Spending Account

Dependent Care Flexible Spending Account

Providers