Define: Flexible Savings Account

An FSA is a special account that allows you to set aside pre-tax money for certain medical and dependent care expenses.

Medical expenses such as copayments, deductibles, and certain over-the-counter medications, as well as dependent care expenses such as daycare or after-school care.

The maximum contribution amount is set by the IRS each year, and for 2021, it is $2,750 for medical FSAs and $5,000 for dependent care FSAs.

Yes, as long as they are considered eligible dependents under IRS rules.

For medical FSAs, up to $550 of unused funds can be rolled over to the next plan year, or you may have a grace period of up to 2.5 months to use the funds. Dependent care FSAs do not have a rollover option.

Yes, as long as they are considered eligible medical expenses under IRS rules.

Generally, you can only change your contribution amount during open enrollment or if you experience a qualifying life event such as marriage, divorce, or the birth of a child.

No, FSA funds cannot be used for elective cosmetic procedures unless they are medically necessary.

Yes, as long as the treatments are considered eligible medical expenses under IRS rules.

You may be eligible for COBRA continuation coverage for your FSA, or you may have the option to spend down your remaining funds before leaving your job. Be sure to check with your employer or plan administrator for specific details.