- What types of FSAs are available?
- There are two types of FSAs employers can offer to employees. Employees can participate in one or both.
- Medical FSA — Allows employees to pay for eligible expenses not covered by the health plan, such as deductibles, coinsurance, dental care, orthodontia and vision care. The total amount the employee chooses to contribute is available to them on the first day of the plan year, even if they have not contributed that much yet.
- Dependent Care FSA — Allows employees to pay for day care expenses for their children under age 13 or for older dependents not capable of self-care needed to allow an employee to work. The money must be contributed to the employee’s account before they can request reimbursement.
Per the IRS, the following limits apply:
Medical FSA Dependent Care FSA Employee contribution maximum: $2,700 Employee contribution maximum: $5,000
Depending on their tax bracket, an employee can save nearly 30% on most medical, health, and child or elder care expenses. An employee earning $30,000 with a $2,000 FSA contribution can save an estimated $300 in taxes.