A white piggy bank with FSA written on it in red next to a black stethoscope on a wooden table.
A flexible spending account (FSA) is an employer offered account where you can put money toward a variety of health needs and services.

Health Care Flexible Spending Account

Health care costs can be expensive. Even if you have health insurance, costs not covered by your policy can add up. One way to help pay the costs is through a health care flexible spending account (FSA).

This article provides information on what a flexible spending account is, what is covered and how it can help with your health care costs.

What is a Health Care Flexible Spending Account?

Flexible spending accounts are a special type of employee saving funds offered through an employer. There are two types of flexible spending accounts:

  • Dependent care accounts. This account is used to cover costs associated with childcare or dependent care.
  • Health care accounts. This type of flexible spending account is used to help with medical costs.

A health care flexible spending account has tax advantages, meaning it can save you money on your taxes. You may contribute up to a certain amount each year as determined by the Internal Revenue Service (IRS).
The money saved in your flexible spending account is used to pay for eligible medical services and health care needs. It provides money specifically for health-related costs. It is one tool to help individuals manage their medical and health care budget.

How Does a Health Care Flexible Spending Account Work?

Once signed up, the amount you decide to contribute is deducted from your paycheck and placed in your flexible spending account.

The amount a person contributes is up to them, but there is a maximum amount allowed. One thing to consider is that a healthcare flexible spending account is not the same thing as a traditional savings account. For example, if you leave your job, you do not take the money with you. Instead, you forfeit it.

Also, individual plan rules may vary by employer. Some employers may roll over the funds from year to year. So, if you do not use all the money in your account, it carries over into the next year. Other employers may not allow a rollover. This means if you contribute more than you spend in a year, you will lose that money.

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7 Services a Flexible Spending Account Provides

There are different options and services a health care flexible saving account offers. In most cases, you can use money from your flexible spending account for dental and medical expenses for yourself, your spouse and your dependents.

Consider some of the following services you can use a health care flexible spending account for:

1. Health Plans

All flexible spending accounts allow funds to be used for certain expenses related to health insurance. You can use the money to pay for deductibles and copayments, but you cannot use it to pay for insurance premiums.

2. Dental Work

According to HealthCare.gov, you can also use funds in your account to pay for dental work. For example, you can use the account to pay for any type of dental work, such as crowns, fillings and cleanings. If you have dental insurance, payment for copays and deductibles is allowed, but similar to health plans, you cannot use it to cover dental insurance premiums.

3. Eyeglasses and Eyecare

Paying for eyecare-related expenses is also allowed with a flexible spending account. In addition to coverage for eye doctor visits, account funds can also be used to pay for eyeglasses, contact lenses and lens supplies.

4. Prescriptions

The money in your spending account may also be used for prescription medication to treat a medical condition or disease. The medications covered include generic and brand-name drugs. Additionally, over-the-counter medications can also be purchased using the funds in your account.

5. Menstrual Products

Under your flexible spending account, menstrual products are also covered. You can use funds to buy products, such as tampons, pads, panty liners and menstrual cups.

6. Diabetic Supplies

Diabetic supplies may also be bought using flexible spending money. Supplies are eligible for purchase with or without a doctor’s prescription. Supplies covered include test strips, blood sugar monitors and prescribed medications.

7. Breastfeeding Supplies

Breastfeeding supplies are also an eligible service with a flexible spending account. The money can be used for a variety of items related to breastfeeding, such as a breast pump, breast milk storage bags and disposable nursing pads.

A flexible spending account can also be used for a variety of additional medical and health costs. If you are not sure what is eligible for coverage, you can check the allowed expenses stated by the IRS.

What Are the Benefits?

If your employer offers a flexible spending account and you are unsure about enrolling, consider a few benefits:

  • Money is set aside for health expenses. The money in your account is only for health and medical expenses. For example, you cannot use it for a vacation or other non-health related things. This may be helpful in having the money there for medical expenses when needed.
  • Tax advantages. Your pre-tax contributions decrease your taxable income.
  • Easy access to funds. Most flexible spending accounts offer debit cards, so your money is easily accessible.