Healthcare Flexible Spending Accounts (FSAs) are tax-advantaged healthcare accounts that allow you to make pre-tax contributions to pay for eligible medical expenses. Millions of Americans use a healthcare FSA to help reduce their overall healthcare costs.

Healthcare FSAs are very simple to use. You may be able to pay for eligible expenses with a debit card1, just like any other transaction.

Although simple to use, there are a few tips and tricks that can help you get the most value from your account.

#1 Take advantage of your “day-one” available balance

During annual enrollment season, you’ll need to elect an FSA as well as choose your annual contribution amount. Let’s say you elect to contribute $1,500 for the plan year. Your employer will deduct $1,500—usually in equal increments—from your paychecks over the course of the year. So, in this example, if you receive 24 paychecks in a year, you can expect $62.50 deducted from each.

Here’s the cool thing. The entire $1,500 will be available on the first day of the new plan year. There’s no need to wait for your payroll contributions to accrue a balance. That means you essentially get an advance from your employer to help cover the cost of eligible medical expenses.

You can always view the latest IRS contribution limits at this page.

#2 Save even more when your spouse contributes to their own Flexible Spending Account

Healthcare FSA contribution limits apply on a per employee, per employer basis. Your spouse can elect a healthcare FSA of their own as well—and also contribute up the IRS limit, provided their employer also offers a healthcare FSA.

Doubling up your healthcare FSAs could be a good idea if your family expects to incur significant out-of-pocket medical expenses from, say, welcoming a new family member or some other surgery. Just keep in mind that you can’t pay for the same expenses out of both accounts. Each expense must tie to only one account.

#3 Use your healthcare FSA to pay for your spouse and dependents too

Even if your spouse doesn’t elect their own healthcare FSA, you can use the money in your healthcare FSA to pay for their eligible medical expenses. You’re allowed to spend healthcare FSA dollars on your eligible dependents as well.

In this respect, your healthcare FSA is a great family account. So, when you plan your annual healthcare expenses, be sure to consider everyone’s potential needs.

#4 Pay for eligible dental and vision expenses

Healthcare FSAs aren’t only for traditional healthcare costs. You can use your account to pay for eligible dental and vision expenses as well. This includes dental cleaning, orthodontia, eye exams, prescription eyeglasses, contacts, and more.

When you plan your annual expenses, be sure to account for dental and vision expenses, too.

#5 Check for a carryover or grace period option

Because healthcare FSAs are employer-owned accounts, they include a use-it-or-lose-it rule. That means all unused FSA funds are eventually returned to your employer. The advantage of this arrangement is that you get your entire annual election amount on the first day of the plan year. But you need to stay alert to the healthcare FSA fund expiration date.

Many employers, however, elect to offer a carryover or grace period option.

The carryover option lets you carry over a portion of remaining Health FSA funds into the next plan year. So, if you don’t spend your entire account balance, you might be able to keep some of that money for another year.

The grace period option gives you extra time at the end of the plan year to incur eligible expenses.

When it comes to carryover and grace periods, every organization adopts their own unique rules. So, be sure to review your plan documents carefully.

Have questions? Visit our Help Center.

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