A Flexible Spending Account of FSA for short is an account where employees in the United States are eligible to set aside a certain sum of pretax money from their salary for dental and medical expenses that fall outside the scope of what their health insurance covers.
According to Federal reports approximately 16 million American workers contribute to their FSA accounts.
However the onset of the pandemic saw the government ease the rules around FSA accounts, under the COVID-related Tax Relief Act of 2020, with contributors benefitting from the extensions and fund roll overs for 2020, 2021, and 2022.
With the pandemic now nearing its end, the United States government has announced an expiration date of March 15, 2022 meaning the grace period is set to end.
What does the FSA Cover do?
As mentioned already, an FSA account covers any expenses that your regular health insurance provider does not cover.
However, an individual’s FSA could also cover a much broader range of medical products and services, such as prescribed medication, first aid kits, breast pumps, tampons and menstrual pads, thermometers, and blood pressure monitors.
Funds from your FSA account could also be used to cover COVID-19 related expenses such as masks, hand sanitisers, and pulse oximeters.
Further funds from your FSA could also be used to cover deductibles and copayments, excluding health insurance premiums.
Finally, FSA funds could also be used to cover certain medical and dental expenses for either your spouse or dependents.
How much can you set aside in your FSA account?
Typically you are allowed to contribute 2,850 dollars a year to your FSA account based on information provided by healthcare.gov.
Married couples could be eligible for twice that amount provided their spouse also adds 2,850 from their earnings and through their employer to their respective FSA account.