Flexible Spending Account (FSA)
benefitsAlso known as: FSA, Flexible Spending Account
Updated · Written and reviewed by Konstantin Iakovlev
Detailed explanation
FSAs reduce taxable income at the federal + FICA level. Health FSA covers medical, dental, vision, OTC medications. Dependent Care FSA covers daycare, preschool, after-school, summer day camps for children under 13 (or disabled adults). Carryover rules: up to $660 of unused health FSA can roll to next year (2026 limit), or 2.5-month grace period (employer choice). Dependent care has no carryover. FSAs differ from HSAs: FSA has no underlying HDHP requirement but funds are not portable (lose at job change). Limited-purpose FSA (dental/vision only) can coexist with an HSA.
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