A flexible spending account or FSA is an arrangement through your employer that lets you pay for qualified expenses with tax-free dollars.

Let's say you earn $45,000 per year. You would fall under the tax bracket that owes $5,147 plus 22% of the amount over $44,725.

If you decide to elect $3,000 into an FSA, you will only be taxed for $42,000 of your salary. With the deduction, you would fall under the tax bracket that owes $1,100 plus 12% of the amount over $11,000.

After some calculations, you would save $387.50 in taxes owed for the year and have $3,000 set aside for medical expenses!

During your benefits enrollment, you can elect to set income aside into an FSA up to the annual election limit.

The money you elect to set aside is immediately made available by your employer and can be spent on qualified expenses.

Your employer takes the appropriate amount per paycheck to recoup the FSA funds made immediately available to you for the year.
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For example, if you elect to put aside the $3,000 into an FSA this year, your employer will take out funds as follows:

You may have heard this term when people talk about FSAs. While it's true that you lose the funds left over in your FSA account at the end of the year, some employers allow you to roll over up to the annual rollover limit or extend the deadline to spend funds by up to 2 months.

There are three types of FSAs with different annual limits and advantages:

Check them out and pair them with other benefits available to you to save more!