Savings with Your Health FSA

A Healthcare FSA lets you pay for qualified out-of- pocket healthcare expenses on a pre-tax basis. The money you contribute to a Healthcare FSA is not subject to payroll taxes, so you end up paying less in taxes and taking home more of your paycheck.

Contribution to Your Healthcare FSA

The IRS sets the annual contribution limits. A different limit may apply to you according to your employer’s plan.

Estimating Contributions to Your Healthcare FSA

A Healthcare FSA is an annual account. As a rule, the money you contribute to your Healthcare FSA must be used within the plan year.

That’s why it’s important to estimate how much you spend on eligible healthcare expenses for you and your eligible dependents each year before you decide how much to contribute to your Healthcare FSA.

Changing Your Healthcare FSA During the Year

You should plan on a Healthcare FSA annual election amount that meets your needs for the entire plan year. As a rule, you can’t change your Healthcare FSA election amount during your plan year.

But there are limited circumstances when you can make changes. For example, if you experience what’s called a Qualifying Life Event, like a marriage or a birth, you may change your Healthcare FSA election amount mid-year.

It’s important to note that if you leave your job, any money left unspent in your Healthcare FSA stays with your employer. You can’t take your Healthcare FSA with you if you leave your company. But if you quit or are terminated from your job and you still have money left in your account, you may elect COBRA to continue your Healthcare FSA through the end of your plan year.

Avoiding “Use It or Lose It” with Your Healthcare FSA

Nervous about enrolling in a Healthcare FSA because you’re afraid of losing money left unspent in your account at the end of your plan year? Don’t be!

While it’s always important to choose your annual election amount carefully, the “use it or lose it” rule no longer applies to all types of Healthcare FSAs.

What happens to money left unspent in your account at the end of a plan year depends on the type of Healthcare FSA your employer has chosen for its employees.

Depending on your employer’s plan, you may:

• Carry over up to the allowed annual IRS carry over limit left in your account from one plan year to the next
• Have a grace period of up to 2½ months after your plan year ends during which you can spend down money left in your account
• Forfeit any money left unspent in your account at the end of your plan year to your employee

Check with your employer to find out which type of Healthcare FSA you have:

• Healthcare FSA with Carryover
• Healthcare FSA with Grace Period
• Standard Healthcare FSA

Enrolling in Your Healthcare FSA

You enroll in or renew your enrollment in your Healthcare FSA through your employer during your Open Enrollment period. Your human resources department or benefits administrator can tell you when employees in your organization can enroll in a Healthcare FSA and help you get started.