Ever find yourself asking, "How is my FSA funded?"
Flexible savings accounts (FSAs) are a great benefit to have. It can help you offset the rising costs of healthcare. These plans are tax-advantaged and applicable to qualifying medical expenses. But how do they get funding?
How is My FSA Funded?
An FSA is a benefit that many employers offer. You can only get one through your job. Unfortunately, self-employed individuals don't qualify for an FSA. However, they may be able to get a health savings account (HSA).
When setting up your FSA, you can choose how much to contribute. That figure comes out of your paycheck, reducing your taxable income. There is a limit to how much you can contribute from each pay period. In 2023, the annual limit is $3,050 for individuals and $5,000 for households. If you would like to know about how is my FSA funded, visit this website.
How an FSA Works
FSAs are a "use it or lose it" situation. A few exceptions exist, but FSAs don't roll over to the next year. You must use your contributions before the start of the next tax year.
The good news is that there are many qualified medical expenses. You can use an FSA for insurance deductibles, doctor's visits, medical procedures and more. That's not all. You can even use your FSA for over-the-counter purchases. For example, your FSA will cover the cost of pain relievers, feminine hygiene products, etc. This detail is a new change. Over-the-counter purchases didn't qualify in the past, but they do now.
When you want to use your FSA, you must provide receipts and go through your employer to contact your FSA provider. You may have an accessible portal to request reimbursements, but it's always through something your employer sets up.
What Happens If You Change Jobs?
Because an FSA is tied to your employer, it's wise to use your funds before departing. Otherwise, you may forfeit the amount you contribute. Fortunately, there are many ways to use up your FSA. Thanks to the many tax advantages, it's better to spend it than lose it.
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 health investment blog.