There are many ways to save for healthcare expenses, including through health savings accounts, certain insurance accounts, and long-term care plans. While these options all provide a wealth of benefits, flexible spending accounts (FSAs) are often used by people who want to maximize their tax savings while also having more freedom to cover out-of-pocket healthcare costs.

What is an FSA?

An FSA account is an account in which money can be contributed tax-free. The funds in an FSA can then be spent on healthcare costs that may not be covered by an insurance plan. Unlike a health savings account (HSA), an FSA account is owned by the employer, not the individual. If you are looking for FSA account, visit this website.

As a result, funds contributed to the account by the employer remain at the end of the year. This is why you’re encouraged to “use it or lose it” as most FSA funds do not roll over.

Your Employer Can Choose to Roll Funds Over

While funds in an FSA do not roll over by default, your employer can choose to allow some portion of an account’s funds to roll over. If this option is selected, you’re still limited as to how much can be rolled into the next year. For 2022, this amount is $570. Anything over this amount that is not used will be forfeited.

Grace Periods

If an employer does not opt to allow funds to roll over, it is possible to allow for a grace period of up to two and a half months for the funds to be spent after the end of the year. During this period, funds can continue to be used as normal, and they do not contribute toward the annual maximum for the incoming benefit period.

Talk to Your Employer

In order to know whether your funds roll over or not, it’s best to speak with your employer. Your human resources department should be able to provide you with details about the specifics surrounding your FSA and its limitations. You should also look into any IRS guidelines for the current year about FSA usage and funds available for more details.

Read a similar article about 2022 retirement contribution limits here at this page.