Flexible Spending Accounts: Independent Information about FSAs
Your best resource for reliable information about dependent care and health spending accounts
Introduction to Flexible Spending Accounts:
A Flexible Spending Account (FSA) is a way for you to put money aside tax-free for important and necessary expenses. This can potentially save you thousands of dollars in taxes on April 15. Put simply, a Flexible Spending Account involves an employer setting aside part of your earnings to pay for eligible expenses before taxes are taken out, and in doing so this lowers the overall tax you owe at the end of the year.
There are primarily three types of FSA:
1. The Health Care Spending Account FSA (also known as Medical FSA, Medical Expense FSA, or simply Health FSA), where qualified medical expenses are put aside.
2. The Dependent Care Account FSA, where qualified child and other day care expenses can be put aside. While almost always used for children, they can also be used for “adult day care” for elderly dependents.
3. The Travel Expense FSA, where the costs of using public transportation and in some cases tolls and parking can be put aside tax-free
(Note that funds cannot be transferred between different types of FSA if you have more than one type, a common confusion)
There are two very important limits you must know about when signing up for a Flexible Spending Account, whether dependent care, health spending, or travel:
1. Most importantly, you must spend all the money put within the “plan year” on eligible expenses, which is usually company’s fiscal year but not always. The money left in the account at the end of the “plan year” not spent on eligible expenses is forfeited back to the company, although sometimes there is a grace period at the end.
2. Second, always make sure your expenses “qualify”. A description of the eligible expenses for each Flexible Spending Account might vary from company to company, and even though they are generally logical and fair, it is vital that you check out the full listing of a FSA plan’s inclusions, exclusions, and limits before signing up.
Your company’s Flexible Spending Account will likely save you money, and the plan administrator should be able to show you how!
Our site will provide up to date information and advice about Flexible Spending Accounts, including any tax law changes that affect limits and eligible expenses as well as different innovations that FSA companies roll out. If you want more detailed information about a particular type of Flexible Spending Account, we will have specific pages dedicated.
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About Us and this Website
We are an independent website dedicated to providing you with accurate and unbiased information and advice about flexible spending accounts of all types, including health spending accounts, dependent care accounts, and travel accounts. We are not directly affiliated with any provider of flexible spending account management, nor do we accept direct promotion from these agencies, so we can ensure that what we provide is truly unbiased and independent. We have no stake in your choice – we do not gain or lose no matter whether you choose any type of FSA.
More and more, companies are offering flexible spending accounts, often referred to as cafeteria plans, for their employees. These FSAs present the possibility of a win-win, since there are tax advantages for both the employer and employee if done correctly. That said, it is vital that people who choose any type of flexible spending account completely understand the rules and potential pitfalls before signing up. Most FSA companies do a nice job explaining everything, but it can still be a bit confusing and overwhelming, and we felt that a fully independent website in this niche would be helpful.
So, in summary. Flexible Spending Accounts, including both health spending and dependent care accounts are an excellent choice for many people, perhaps including you, but for some there are other choices or they may not be the most advantageous route. Sometimes a flexible spending account is a good idea, but only when modified in some way. Finally, for some people a certain very particular approach to managing their flexible spending account will maximise their potential financial benefit – for example you absolutely need to know what the eligible expenses and limits are and make sure you will spend out your withholding. We will cover all of these topics here and update our site often as things change in the world of FSAs.
Our site is divided into the following sections (you can navigate in the listing to the left or in the drop-downs above):
- Our Blog covers the very latest information and advice about flexible spending accounts including health spending and dependent care accounts
- Health Care Spending Accounts specifically covers this type of FSA in detail including eligible expenses and limits
- Dependent Care Accounts specifically covers this type of FSA also including eligible expenses and limits
- Limits and Rules goes into even more detail about the rules and eligible expenses surrounding each type of FSA
- Other Types of FSA describes the lesser known types of flexible spending account
- Spending Out Your FSA helps you ensure you don’t end up with a balance in your dependent care or health spending account
- Tax Advantages will help you see how much you can save on your taxes with a health spending or dependent care account
We also welcome all feedback from our visitors, though we do screen out comments that we feel may be biased toward the FSA industry dual to a dual role of some sort. If you’ve had a flexible spending account, whether it was a dependent care account, health spending account, or another type, and want to share your experience, please feel free. We want to hear from those for whom it was an excellent choice, as well as those who may have learned from a flexible spending account mistake of some sort. We will post questions people may have about health spending or dependent care accounts but cannot guarantee answers to all of them, and we cannot guarantee that answers provided by other visitors are completely accurate.
Flexible Spending Account Disclaimer
Your unique financial situation may be complex and to get the most accurate advice about whether to pursue a flexible spending account you should talk to a financial advisor about your own situation. At the very least, run scenarios through whatever tax preparation software you use, and also look up issues specific to your own situation. Flexible spending accounts carry some financial risk, especially if your financial situation is either complicated or likely to change in some way. We cannot possibly factor in your unique situation when offering general advice and information here.
Flex Spending Account Website Copyright and Legal
Flex Spending Accounts provides fully independent and original content regarding Flexible Spending Accounts – Dependent Care Accounts Health Spending Accounts and others. We pride ourselves on being fully unbiased and not connected to any company offering these products. For these reasons all information contained here is protected by copyright, and we reserve all rights. At times we might allow other with websites covering similar content to use our material, but only with prior permission and proper attribution. Please contact us if you are a provider of unbiased information and would like to use information contained here.