A flexible spending account is a benefit that may be offered by your employer that allows you to set aside money during the calendar year to pay health or medical expenses, plus additional qualified expenses such as day care fees. The key is to know how to best estimate how much money to set aside, then to maximize its use so you won't forfeit any of that money.
Each year, as you determine which health insurance plan is the right one for you during your open enrollment period, your employer may also allow you to set up a flexible spending account. In order to do that successfully, you'll want to understand how to maximize the use of a flexible spending account (FSA).
Maximizing your savings by using an FSA does not have to be difficult. Here are some steps to walk you through determining what will be most accurate set-aside from your paychecks:
- Know the IRS Rules about FSAs
- Determine How Much Money You'll Need to Cover Next Year's Expenses (FSA)
- Do the Math to Determine Your FSA Set-Aside
- Last Step - Preventing the Loss of Your Money Next Year
(Note: Don't confuse a Flexible Spending Account (FSA) with a Health Savings Account (HSA). The rules and usage are different. Learn more about the differences here.)
