A healthcare FSA is a tax-advantaged savings account your employer offers that lets you set aside pre-tax money to pay for medical expenses

A Flexible Spending Account (FSA) for healthcare is an account funded with your own money — taken from your paycheck before taxes are withheld. You decide how much to contribute each year, up to an annual limit set by the IRS. The money sits in the account, and you use it to pay for may be able to access medical, dental, and vision expenses. Because the money goes in before taxes, you pay less in federal income tax and payroll taxes that year.

Your employer administers the account, usually through a third-party company that handles the paperwork and payments. You do not receive the money as cash; instead, you typically get a debit card linked to the account, or you pay out of pocket and submit receipts for reimbursement. The key trade-off is that any money you do not spend by the end of the plan year is forfeited — you cannot carry it over to the next year (with rare exceptions for a small carryover amount or a grace period, depending on your plan).

Key Takeaways

  • You contribute pre-tax money through payroll deductions, which reduces your taxable income for the year.
  • You can use FSA funds only for IRS-approved medical, dental, and vision expenses — not for insurance premiums or general wellness products.
  • Money left unspent at the end of the plan year is forfeited, so you must estimate carefully how much you will need.
  • You can change your contribution amount only during open enrollment or if you have a may have access to life event, such as a change in employment or family status.

What Expenses You Can Pay For With an FSA

The IRS maintains a list of may be able to access expenses, and they are narrower than many people expect. You can use FSA funds for copayments, coinsurance, deductibles, and prescription medications. Dental work — including cleanings, fillings, root canals, and orthodontia — qualifies. Vision expenses such as eye exams, glasses, and contact lenses are covered.

Other may be able to access expenses include medical equipment (crutches, wheelchairs, hearing aids), certain over-the-counter medications (but only if you have a prescription from a doctor), and mental health treatment. Fertility treatments, including in vitro fertilization, are also covered. However, health insurance premiums themselves — whether for medical, dental, or vision — cannot be paid from an FSA, nor can cosmetic procedures, vitamins, or general wellness products without a medical prescription.

The rules can be counterintuitive. Sunscreen, for example, is not covered unless prescribed for a specific skin condition. Gym memberships and weight-loss programs are not covered, even if medically recommended. If you are unsure whether an expense qualifies, your FSA plan administrator can tell you before you spend the money.

How Much You Can Contribute Each Year

The IRS sets an annual limit on how much you can contribute to a healthcare FSA. For 2024, that limit is $3,200; for 2025, it is $3,300. These limits change yearly and are announced by the IRS in the fall. Your employer may set a lower limit, but cannot require you to contribute more than the IRS maximum.

You choose your contribution amount during your employer's open enrollment period, which usually happens once a year in the fall for coverage beginning January 1. The amount is divided equally across your paychecks for the year. If you have a may have access to life event — such as marriage, divorce, birth of a child, loss of other health coverage, or a significant change in your spouse's employment — you may be able to change your contribution outside of open enrollment.

The "Use It or Lose It" Rule and Carryover Options

Money left in your FSA at the end of the plan year does not roll over to the next year — it is forfeited. This is the most important limitation of an FSA. If you contribute $2,500 and spend only $1,800, you lose the remaining $700. This rule exists because of tax law, not because your employer wants to keep the money.

Some employers offer a grace period of up to 2.5 months into the next year, during which you can spend the previous year's remaining balance. Others allow a carryover of up to $610 (as of 2024) into the next plan year. Your employer chooses whether to offer either option, so check your plan documents to see what applies to you. If your plan offers neither, you must estimate conservatively to avoid losing money.

How to Submit Claims and Get Reimbursed

Most FSA plans issue a debit card that you can use at pharmacies, doctors' offices, and other providers. The card is linked to your account, and the purchase is deducted automatically. However, not all providers accept FSA cards, so you may need to pay out of pocket and request reimbursement.

To request reimbursement, you submit a claim form (usually online through your plan's website or app) along with a receipt or explanation of benefits from your provider. The plan administrator reviews the claim to confirm the expense is may be able to access, then reimburses you — typically within one to two weeks. Keep all receipts for at least three years in case of an audit.

FSA vs. Other Tax-Advantaged Accounts

An FSA is different from a Health Savings Account (HSA), though both offer tax advantages. An HSA is only available if you have a high-deductible health plan, and money rolls over year to year — you do not lose it. An HSA can also be invested, making it a long-term savings tool. An FSA has no investment option and no carryover (except the limited options noted above), but you do not need a specific type of health plan to use one.

A Dependent Care FSA is a separate account for childcare and adult care expenses, with its own annual limit. It works the same way as a healthcare FSA — pre-tax contributions, may be able to access expenses only, use-it-or-lose-it — but covers different costs. Some employers offer both types of FSA, and you can contribute to each one in the same year.

Common Mistakes to Avoid

The most common mistake is overestimating how much you will spend and losing money at year-end. Be conservative: add up your predictable expenses (copayments, prescriptions, dental work you have scheduled) and contribute that amount, plus a small buffer. Do not contribute the maximum just because it is available.

Another mistake is assuming your FSA covers everything medical. Read your plan's list of may be able to access expenses before you contribute. Some people also forget that they cannot use FSA money for insurance premiums, which catches them off guard. Finally, do not wait until December to spend down your account — submit claims early so you have time to correct any errors before the year ends.

Frequently Asked Questions

Can I use my FSA money for my spouse or children?

Yes. FSA funds can pay for may be able to access medical expenses for you, your spouse, and any dependent children, regardless of whether they are covered under your health insurance plan. You do not need to be the one receiving the care to use the money.

What happens to my FSA if I leave my job?

You typically have a limited time (usually 60 to 90 days) to submit claims for expenses you incurred while employed. Any unspent balance is forfeited. Some employers allow you to continue the account under COBRA, but you would pay the full premium yourself, which is usually expensive.

Can I change my FSA contribution mid-year?

Only if you have a may have access to life event, such as marriage, divorce, birth of a child, adoption, loss of health coverage, or a significant change in your spouse's employment. Open enrollment is the normal time to change your contribution amount.

Do I need receipts to use my FSA debit card?

Not at the point of purchase, but you should keep receipts. Your plan administrator may ask for documentation later to confirm the expense was may be able to access. Keeping receipts protects you if there is a dispute.

Can I withdraw money from my FSA without using it for medical expenses?

No. Withdrawing money for non-may be able to access expenses triggers taxes on that amount plus a penalty. The account is designed to hold money only for may have access to medical expenses.