We have a number of insurance options available here at IBG. One such option an employer can choose to provide to employees is a Flexible Spending Account (FSA).
What is an FSA?
A Flexible Spending Account is an account that can be used to pay specific out-of-pocket healthcare costs. While this is a great program, there are certain eligibility requirements necessary for a person to enroll in an FSA. For example, this type of account is only available with job-based health plans.
Why is it a good idea to have an FSA?
Money placed in an FSA is tax free. This means you not only have money to spend on health concerns, you can spend this money tax-free.
FSA’s can be used to pay for things like medication, medical equipment, medical supplies, and copayments. This can be extremely helpful if you have an insurance plan that has a high deductible or a plan that doesn’t cover things like medicine or crutches.
Are there rules connected with an FSA?
Because an FSA is tax free, there are several rules connected with it. For example, the maximum allowed deduction for an FSA is $2,550 for many 2015 plans. Additionally, you are required to re-enroll in your FSA every year during the open enrollment period, 31 days within your date of hire, or at a qualifying life event.
Can I spend money from my FSA after the 12 month expiration date?
An FSA often requires that the money placed in it must be used within the plan year, but employers may also offer one of the following two options:
- You may be allowed to carry up to $500 per year over for use in the following year.
- You may have a grace period of up to 2 ½ months in your FSA – making the spending period up to 14 ½ months instead of one year.
Can I use my FSA to cover my child’s medical expenses?
An FSA can be utilized for children under 13 years old who are claimed as a dependent for tax purposes. Additionally, it can be used in the care of a disabled spouse or disabled dependent of any age.
Because a Flexible Spending Account is only available through insurance provided by an employer, be sure to see if this is an option provided to you. It can help you save a lot of money and take care of your family, tax free.
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