Flexible Spending Account Overview

Through FSAs, you can pay for certain health and dependent care expenses with before-tax (tax-free) dollars. There are two types of FSA plans:

• Health Care – This plan allows you to pay up to $15,000 in healthcare expenses (for you and your dependents) that aren’t covered by insurance, with tax-free dollars (such as deductibles and co-payments and services not fully paid by your insurance coverage).

• Dependent Care – This plan allows you to pay up to $5,000 with tax-free dollars to someone who is caring for your dependents (children or incapacitated adults) so you can work.

These accounts allow you to pay for planned expenses with before-tax dollars. For example, if you earn $40,000 and put $2,000 into an FSA (either health care or dependent care), you will reduce the income you pay taxes on to $38,000.

When you use money out of your paycheck to purchase something, you are paying for that item with after-tax dollars. You can make your pay check go farther if you contribute to an FSA and use tax-free FSA money to reimburse yourself for eligible healthcare and dependent care expenses.