Flexible Spending Account (FSA)
Having the flexibility to make health-related payments is becoming increasingly common—especially if they can be made tax deductible. With a Group Flexible Spending Account (FSA), you can take advantage of this type of account through your group health plan, if you qualify.
What is a Group Flexible Spending Account?
A Group FSA stands for a Group Flexible Spending Account.
At its core, a group flexible savings account is designed to allow users to set aside money to cover healthcare related expenses before taxes are taken out of a paycheck. A Group Flexible Spending Account is ideal for users who want to have money set aside for prescription costs, co-pays, medical equipment, prescribed supplements, devices, and more.
A group FSA functions the way that a typical saving or checking account would in that users can draw from the funds in the flexible spending account to pay for healthcare-related costs the same way that they would use a debit card to draw from a regular bank account. The main difference between a group flexible spending account and a regular checking or savings account is the purpose of the account.
Additionally, since users add funds to the flexible spending account on a pre-tax basis, it can help them maximize their savings for future healthcare expenses without cutting into their take-home pay as much as a regular savings account where contributions are added on a post-tax basis would do.
In most cases, a flexible spending account for healthcare is tax-deductible. It is also not subject to state, local, and federal taxes in most cases.
Of course, there may be exceptions to this rule, so it is always important to investigate the specifics of a group flexible spending account before committing to choosing that plan.
Some examples of the FSA include a Medical FSA and a Dependent Care FSA. The Dependent Care FSA only applies to dependent children of the account holder under the age of 13. Once a child turns 13, he or she is no longer eligible to be covered unless disabled or incapable of self-care.
What Does a Group Flexible Spending Account Cover?
A group flexible spending account covers a wide range of services.
From prescription costs to co-pays to medical equipment to services not covered by insurance, a group flexible spending account can cover most things that are either not covered by insurance, which a patient would prefer to cover through self-pay.
What Does it NOT Cover?
Teeth whitening, skin lightening, glasses maintenance contract feeds, cosmetic treatments, illegal treatments, illegal surgeries, supplements that don’t have a prescription or documentation indicating medical need, and hygiene items are all not covered by FSA.
Of course, this list is not exhaustive, so it’s best to consult a specific plan for more details.
What are the Limitations?
Limitations to the group FSA include the maximum contribution.
In some cases, this is set at $5,000 by the IRS, while other cases may be set to $2,500. Additionally, the FSA is limited in what it covers.