As of 2015, a health spending account, or Flexible Spending Account, allows individuals to set aside up to $2,500 to spend on out-of-pocket health care expenses, according to HelathCare.gov. These expenses include copayments, deductibles, some prescriptions, and other appropriate health care costs.Continue Reading
Available only through employer health care plans, a Flexible Spending Account can either be funded by an employee only or an employer can choose to contribute to the account on behalf of the employee, explains HealthCare.gov. Once the money is deposited into the FSA, it must be spent on approved health care costs within the plan year or the amount unspent is lost. To mitigate this, an employer is allowed to offer a grace period of 2.5 months or allow a rollover amount of $500, but not both. They can also choose not to offer either option. Because the money is set aside income-tax free, health care costs are lowered.
The money can be used for appropriate medical and dental expenses as outlined by HealthCare.gov. Examples of allowed expenses, according to the IRS, include regular physicals, preventative dental visits, chiropractic care, X-rays, hospital visits, prescription birth control and approved vision services. Insurance premiums, however, are not reimbursable through Flexible Spending Accounts, nor are items such as non-prescription medication or nutritional supplements.Learn more about Diagnostics & Imaging