The busy holiday season may not be when scheduling health care appointments is high on your priority list. But if your insurance plan includes a flexible spending account, December is the prime time to pay this money some mind.
A flexible spending account (FSA), is offered by some employers to cover costs that fall through the insurance cracks. Because even if you have decent health care coverage, chances are it still doesn’t meet all your needs.
FSAs handle deductibles, copays, and other out-of-pocket health care expenses that insurance leaves behind.
FSA funds come from the employee’s wages before taxes, although an employer may also contribute to the account. What makes paying into an FSA such a good deal is that it’s tax-free, which means the FSA portion of your paycheck is exempt from federal and state income taxes. According to the Congressional Research Service, people save about 23 percent in taxes by paying their otherwise out-of-pocket health care costs through an FSA.
