Flexible Spending Accounts (FSAs)
Tax-free savings for healthcare and dependent care
FSAs let employees set aside pre-tax dollars to pay for eligible medical, dental, vision, and dependent care expenses — reducing taxable income and boosting take-home pay.
Types of FSAs
Health Care FSA (HCFSA)
Covers out-of-pocket medical, dental, vision, and prescription costs. Can be standard or limited purpose (for HSA participants).Limited Purpose FSA (LPFSA)
Designed for HSA users; reimburses only dental and vision expenses to preserve HSA savings.Dependent Care FSA (DCFSA)
Helps pay for child care or care for dependent adults unable to care for themselves.
Key features
Eligibility: Available to employees during open enrollment or after a qualifying life event
2026 Contribution Limits:
HCFSA: Up to $3,400 per person
DCFSA: Up to $7,500 per household ($3,750 if married filing separately)Tax Benefits: Contributions are pre-tax; withdrawals for qualified expenses are tax-free
Qualified expenses:
HCFSA: Medical, dental, vision, prescriptions
LPFSA: Dental and vision only
DCFSA: Child care and adult dependent care
Year-end rules:
Use-it-or-lose-it applies unless employer offers:
Grace Period: 2.5 extra months to spend funds
Carryover: Up to $660 (2025-2026) can roll into the next year
FSAs are a smart, tax-efficient way to manage everyday healthcare and dependent care costs. Employers can enhance benefits offerings while helping employees save more.
Dependent Care FSAs
HSAs vs. FSAs
