Flexible Spending Accounts (FSAs) for individuals | Aetna (2024)

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Flexible Spending Accounts (FSAs) for individuals | Aetna (2024)

FAQs

What are flexible spending accounts FSAs? ›

A Flexible Spending Account is an employee benefit that allows you to set aside money from your paycheck, pre-tax, to pay for healthcare and dependent care expenses. Unlike a Health Savings Account (HSA), an FSA is not administered by your health insurance. However, it can still help you save money on income taxes.

What is the FSA for individuals? ›

An arrangement through your employer that lets you pay for many out-of-pocket medical expenses with tax-free dollars. Allowed expenses include insurance copayments and deductibles, qualified prescription drugs, insulin, and medical devices.

What can I spend my FSA money on? ›

You can spend FSA funds to pay deductibles and copayments, but not for insurance premiums. You can spend FSA funds on prescription medications, as well as over-the-counter medicines with a doctor's prescription. Reimbursem*nts for insulin are allowed without a prescription.

What is the biggest disadvantage of the FSAs? ›

While FSAs offer several benefits, they also have limitations. The 'use-it-or-lose-it' rule can lead to the loss of unspent funds. Additionally, there are restrictions regarding eligible expenses and contribution limits, which are determined by the IRS and can change annually.

Is FSA money my money? ›

Healthcare Flexible Spending Accounts (FSA) are tax-advantaged healthcare accounts that let you use tax-free money to pay for eligible medical expenses. Millions of Americans use an FSA to help reduce their overall healthcare costs.

How to check if you have FSA funds? ›

Where do I find my FSA balance? You may check card and account balances by logging into your account and it will be shown on the main dashboard.

Who is eligible for a FSA? ›

FSA Eligibility
  • An employee must be eligible for group medical plan (not enrolled, only eligible) in order to be eligible for Medical FSA.
  • Generally, pre-tax benefits may only be afforded to the employee, their spouses and dependents.

Is an FSA worth it? ›

Gauging whether an FSA is worth it requires carefully weighing the pros and cons. On the one hand, FSAs offer tax advantages and a way to streamline your healthcare budgeting. On the other hand, you risk forfeiting funds due to the use-it-or-lose-it rule, and your contributions and eligible expenses are limited.

What happens to unused FSA funds? ›

For employees, the main downside to an FSA is the use-it-or-lose-it rule. If the employee fails to incur enough qualified expenses to drain his or her FSA each year, any leftover balance generally reverts back to the employer.

Can I cash out my FSA? ›

In rare cases when you need to pay for qualifying expenses but the provider or store doesn't take your FSA card, you can use your card to withdraw cash to make the payment. However, you must keep all the documentation proving that the amount you withdrew was used for eligible expenses.

Is toilet paper FSA eligible? ›

Toiletries can describe anything from oral care items like mouthwash, toothbrushes, toothpaste and floss to hair products like shampoo and conditioners; bathroom products like toilet paper; fingernail clippers, and more.

Can I buy diapers with FSA? ›

Diapers are not eligible for reimbursem*nt with flexible spending accounts (FSA), health savings accounts (HSA), health reimbursem*nt arrangements (HRA), dependent care flexible spending accounts (DCFSA) or limited-purpose flexible spending accounts (LPFSA).

Will a FSA lower my taxes? ›

A Flexible Spending Account (FSA) allows you to put aside a set amount of money from your paychecks before taxes to pay for certain specific health care or dependent care expenses, which lowers your taxable income. What is the main advantage of an FSA? The main advantage of an FSA is the tax savings it offers.

Is it better to have HSA or FSA? ›

Health savings accounts offer many positives: If you use HSA funds to pay for qualified health expenses, the money will never be subject to income taxes. The amount you can save is much more generous than what you get with an FSA.

What is the difference between a FSA and a HSA account? ›

Contributions to HSAs are made with pre-tax dollars, are associated with high-deductible health insurance plans, and can be rolled over each year. Contributions to FSAs are also made on a pre-tax basis and cover a wider variety of activities, but you must use it or lose it each year.

What happens if I don't pay back my FSA? ›

If the employee fails to incur enough qualified expenses to drain his or her FSA each year, any leftover balance generally reverts back to the employer. However, there are two exceptions to the use-it-or-lose-it rule. An FSA plan can allow a grace period of up to 2 1/2 months.

What is considered FSA eligible? ›

Eligible expense: A medical, dental or vision expense your employer's plan says can be paid for or reimbursed. Flexible spending account (FSA): A benefit plan that lets people put money aside in special accounts, pre-tax, to help pay for certain medical costs, child care, and other health services.

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