What is a Flexible Spending Account (FSA)?
A Flexible Spending Account (FSA) is a tax-advantaged financial account that allows employees to set aside pre-tax dollars to pay for eligible healthcare and dependent care expenses. Contributions to an FSA are deducted from an employee’s paycheck before taxes, reducing their taxable income. FSAs are typically offered by employers as part of a benefits package and have a yearly contribution limit set by the IRS. Unused funds may either expire at the end of the plan year or roll over into the next year, depending on the employer’s plan.