Does your employer offer a flexible spending account (FSA)? This sometimes-overlooked employee benefit could help you save for medical expenses. With healthcare costs higher than ever, more people are looking for ways to protect themselves against potential financial ruin due to getting sick or injured. An FSA is a great option to consider.

But what does an FSA cover? Can you use it for copays, and is an FSA worth it? Keep reading for answers to all your questions and more.

How an FSA Works

FSAs are employer-sponsored accounts that allow you to set aside pre-tax dollars for qualified medical expenses. Your employer sets contribution limits, but they can't exceed federal limits. In 2023, that figure is $3,050.

When you need to pay for a qualified medical expense, you can cover it out of pocket and request a reimbursement through your FSA later. FSA funds do not roll over until the next year, so you must use your contributions to avoid losing them.

What Can You Use Your FSA On?

You can only use your FSA on qualified medical expenses. The IRS sets those rules. Generally, anything that's medically necessary qualifies. That includes major procedures, prescription drugs and even simple doctor's visits. You can also use your FSA on certain over-the-counter products like bandages and pain relievers.

But what about copays?

You'll be happy to know that you can use your FSA on copays. Those funds can also cover any deductibles you must meet before your insurance policy kicks in! However, you can't use your FSA on insurance premiums. You'll need to pay for that out of pocket.

Is an FSA Worth It?

Whether or not an FSA is a benefit you should get depends on your situation. However, it's a solid option that you should consider. When you contribute to your FSA via payroll, you're putting in pre-tax dollars. Therefore, it's a tool for saving on climbing healthcare costs.

While you can't bring your FSA with you if you change jobs, and you must use your funds before the year's end, there are many qualified expenses that you can cover. For that reason, having an FSA is generally a smart move for most.

Author Resource:-

Daniel Stewart has been helping people with their money management and personal finance with over 15 years’ experience in business finance. You can find his thoughts at savings investments blog.