Flexible Spending Accounts
A Flexible Spending Account (FSA) provides another opportunity for you to better control your health care dollars. Similar to an HSA, FSAs allow you to use pre-tax dollars to cover health care costs for medical, dental and vision. There are two types of medical FSAs: Medical Care and Limited Purpose.
Both of the State’s FSA programs are administered through Key Benefits Administrators and have a use-it-or-lose-it rule. Money left at the end of the plan year is not rolled over or reimbursed, so plan carefully. For 2017, the maximum annual contribution for the Medical Care and Limited Purpose FSAs is $2,500.
If you are enrolled in a Consumer Driven Health Plan with a Health Savings Account, your FSA will automatically become a Limited Purpose FSA. Under a Limited Purpose FSA you must meet a minimum deductible of $1,300 for single and $2,600 for family prior to using the funds for medical expenses. However, you may use the funds for dental and vision expenses at any point during the year.
The third type of FSA is Dependent Care. Unlike the medical FSAs, Dependent Care is not front loaded and is used to pay for eligible Dependent Care costs such as daycare. The maximum annual contribution about for the Dependent Care FSA is $5,000 ($2,500 if married and filing separate tax returns.