Flexible Spending Account

What is an FSA? Watch the video.

What is an FSA?

A flexible spending account, or FSA, is an employer-sponsored benefit that allows participants to set aside pre-tax funds from their paychecks to help them pay for approved out-of-pocket health care or dependent care expenses. FSAs are an annual plan-year benefit--meaning funds will either expire or a portion of the funds roll over to the following year, depending on your employer’s plan. You'll want to spend down this account every year based on your plan's rules.

Why an FSA?

Most people have expenses through the course of the year that they will need to pay with their own money--or “out-of-pocket.” The advantage of setting aside your funds in an FSA is that you never pay taxes on this money. So, every time you spend it on your out-of-pocket expenses, it’s like getting a 25%-30%* discount!

Calculate your Potential Savings

*tax rates may vary, depending on income and other factors

Types of FSAs

Healthcare FSA

The most well-known FSA is the health care FSA (HCFSA). This plan covers many eligible expenses, such as prescriptions, co-pays, over-the-counter treatments, medical equipment, lab fees, hospital expenses and more.

Dependent Care FSA

A dependent care FSA (DCFSA) can be paired with almost any other kind of consumer account. It is an account to help participants pay for out-of-pocket child care or other dependent care (disabled spouse/child or elder care) expenses. Under the Covid relief package (American Rescue Plan of March 2021), the maximum contribution for dependent care FSAs is now $10,500/year (up from $5,000) per family or $5,250/year (up from $2,500) for married, filing separately. 

Limited Purpose FSA

The limited purpose FSA (LPFSA) is typically paired with a health savings account (HSA). The funds a participant sets aside for their LPFSA are restricted to vision and dental eligible expenses, such as annual exams, prescription glasses and contacts, fillings, non-cosmetic dental work and more. 

FSA Savings Center

Find out how to optimize your FSA and save on everyday eligible expenses.

FSA FAQ

How much can I contribute each year?

For 2021, you can contribute $2,750 to a healthcare FSA or limited purpose FSA. Participants can contribute up to $5,000 for a dependent care FSA. Limits are set annually by the IRS. Your employer may determine a different maximum amount (up to the IRS maximum) depending on your plan.

What can I spend FSA funds on?
How do I use my FSA?
What happens to my unused funds at the end of the year?
My plan has a “grace period.” What does that mean?
My plan has something called carryover or rollover. What does that mean?
May I use my FSA for my spouse’s or dependent’s expenses?
How do I know how much I have left in my account?
Can I change my contribution amount mid-year?
What are eligible expenses for dependent care FSAs?
What are ineligible expenses for dependent care FSAs?
How do I use my limited purpose FSA?

CLAIMS FAQ

Do I need a receipt for my spending?

Most of the time, yes. The IRS requires participants to prove the each expense was is eligible. MyChoice Accounts will help you by requesting documentation when we can’t determine how the funds were used. Usually, an explanation of benefits or a detailed receipt will work. If you use your debit card, we are often able to verify that your expense was eligible based on your location or the items you purchased. This means you won’t need separate documentation. Always keep your receipts until you are sure the claim has cleared.

What happens if I don’t submit documentation?
I hate dealing with receipts. Is there any way around that?

Documentation Simplified

In order to comply with IRS rules, we will want to see the following information on your documentation:

  1. Person who received service
  2. Amount paid for service
  3. Service/Item
  4. Provider name and address
  5. Date of service
  6. Description of service: category and type

At MyChoice Accounts, we’ve made it easy to submit documentation.

If you have a smart phone, you may use the MyChoice Mobile App and take a photo of your documentation and attach it to the claim. You may also use a photo or scan an upload directly to your benefits portal online. Finally, we accept mailed or faxed copies and can add to your records.
 

  1. Log in to your account online or on the MyChoice Mobile App (iOS or Android)
  2. Open your FSA account and review any claims that are flagged or marked “needs documentation”
  3. Open the claim and select “upload documentation.”
  4. If you’re online, you may upload a scanned documentation file. Be sure all parts of the document are legible.
  5. If you’re on the MyChoice Mobile App, go to the account and select the pending claim. Then, to attach a photo, give consent for the app to use your phone’s camera and snap a picture of the documentation, making sure all information is legible.
  6. If you’d like to submit via fax or mail, you may get a form from the reference center of your online benefits portal and send it to the address or fax number noted with the accompanying claim information, so it can be associated with your claim.

Employers and Brokers

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