A Flexible Spending Account (FSA) is a tax-advantaged account allowing employees to set aside pre-tax dollars for medical or dependent care expenses, subject to annual limits.
- What is a Flexible Spending Account (FSA)?
Answer: It is a tax-advantaged account for medical or dependent care expenses. - What expenses can be covered?
Answer: Expenses include copays, prescriptions, and childcare. - What is the annual contribution limit?
Answer: The 2025 limit is approximately $3,050 for healthcare (subject to IRS updates). - What happens to unused funds?
Answer: Funds typically expire at year-end, though some plans allow a grace period. - How is it managed?
Answer: It is managed through payroll deductions and an FSA provider.
