Flexible spending accounts (FSAs) are wonderful savings vehicles that can be used to pay for healthcare expenses, and many people qualify for an FSA through their workplace. An employer-sponsored FSA typically receives contributions from the employer, and this money can be used to pay for certain healthcare costs not covered by traditional insurance. To read the flexible spending account rules, visit this website.

The nice thing about an FSA is that money placed in the account is pre-tax, meaning it is not touched by the government unless it is spent. The potential downside, however, is that money does not roll over to the next year on its own. So, if you have unspent FSA funds at the end of the year, flexible spending account rules state that only $500 of this can move on to the next benefit period if your employer has the program set up this way.

Qualifying for an FSA

To qualify for an FSA, you generally only need to work for an employer that provides access to FSA options. In some cases, you may be eligible for more than one FSA, allowing you to contribute different amounts to each.

Under flexible spending account rules, your spouse typically is included in your FSA qualification. This allows you to spend FSA funds to cover healthcare costs for your spouse even if your spouse is not employed at your workplace.

Likewise, minor children and dependents are also included in most FSA plans. You can utilize FSA funds for a minor child just like you can for yourself.

Who is Excluded From FSA Qualification?

While qualifying for an FSA is usually as simple as working for an employer that provides FSA plan access, it’s important to note that not everyone can qualify. Self-employed individuals generally do not have access to FSA plans. Also, if you are a shareholder who owns more than 2% in an S-corp, you likely will not qualify to take part in a flexible spending account. Some small businesses may also be excluded from offering FSAs. These include LLCs, LLPs, and PCs.

Read a similar blog about HSA strategy here at this page.