Medical FSA 101

To continue our series of commonly used acronyms in insurance, this post will be about FSAs.  Flexible Spending Accounts/Arraignments are similar to HSAs where you can use the pre-taxed money to pay for medical and dental expenses.  There are different types of FSAs. However, today I will only be covering FSAs for medical expenses.

If you read my post dealing with HSAs you are going to see a lot of similarities between HSAs and FSAs. One similarity is that both accounts have a maximum contribution limit.  FSAs have a maximum annual contribution set at $2,600.  If you are married, your spouse can also contribute another $2,600 if their employer offers an FSA.  This contribution is made throughout the year just like an HSA.   However, unlike your HSA account FSA money is available day one of the plan year.  Usually, companies will set up the plan to run starting January 1st and end December 31st however, it can be any 12 month period.

Unlike HSAs your FSA money will not role over.  FSAs are a "use it or lose it" plan.  There are two exceptions to this.  First, an employer can allow an employee to roll over $500 at the end of the year or the other option is to have a 2 ½ month grace period were you can submit claims for the past plan year.  Because FSAs are a use it or lose it plan any money left over it retained by the employer.  That being said the opposite is true because accounts are pre-funded, if an employee leaves during the year and has used all of their FSA funds the employer will not get that money back.

With the American Health Care Act currently (AHCA) being debated in the Senate, FSAs are mentioned in the bill.  The AHCA would allow employers to eliminate FSA limits in their company. Similar to what the AHCA would do to HSA (increases there limits by almost double).

For any questions about FSA accounts or how to set one up for your business feel free to reach out to me or look us up online at bbpadmin.com