Flexible Spending Account
An FSA provided by your company lets you spend pre-tax dollars for qualified medical expenses.
By reducing your taxes, the FSA saves you up to 40% of the cost, without restricting your providers.
Find out how an FSA works and start saving!
Why you save
FSA lets you save on health care, preserving quality and choice. $6,000 worth of health care costs just about $3,700 or 38% off. How so? Being pre-tax income, you avoid about 25% in federal taxes, 5.3% in state taxes, 7.65% in FICA taxes ... totaling 38%.
How to use
FSA works as follows, if your employer offers it:
- Declare in January to your employer how much to deduct from each pay check; for example, $500 per month for that $6,000 treatment.
- Pay out-of-Flexcard (a debit card given to you by your employer), or pay out-of-pocket and seek reimbursement from your employer.
Done! You automatically save about $2,300 at tax time, because your next W-2 will show income $6,000 lower, on which no taxes apply!
Note that the provider does not know or care that an FSA is involved. The savings are from lower taxes, not from lower prices.