Employers that are sponsoring FSAs may receive monthly statements on amounts withdrawn but not usually the purpose (e.g., your employer, if they are using an FSA administrator, should not see that you used your FSA funds for a prescription).
The card won’t appear on credit reports or affect credit scores. The funds are deducted directly from the account, so there are no monthly statements or finance charges for an employee. (You typically select “Credit” when prompted by a point-of-sale card processor.) The card can usually be used like any credit or debit card at checkout, whether online or at a brick-and-mortar store. What is an FSA card?įSA administrators often offer debit cards that participants can use to pay for qualifying medical expenses. Claims can only be reimbursed for services that have already been incurred during the plan year or eligible medical items purchased. In general, advance reimbursement for future and not yet incurred expenses is not permitted. In some instances, a statement that the claim isn’t covered by a health insurance plan may also be submitted. Participants generally submit a claim to their employer’s health FSA along with proof of the eligible medical expense. How does health FSA claim reimbursement work? Learn more in our post about the difference between HSAs and FSAs. Instead, you must enroll in a limited purpose FSA as discussed further below. However, if you are enrolled in an HSA, you may not be able to contribute to a standard health FSA.
You can have multiple insurance plans or none-it doesn’t affect FSA eligibility.
In fact, health insurance coverage isn’t even required to qualify for a health FSA. Unlike a health savings account (HSA), you don’t need to be covered by a high deductible health plan (HDHP) to have a health FSA. Self-employed individuals aren’t eligible for health FSAs. (Other examples of these benefits might include adoption assistance or life insurance coverage.) If selected, the health FSA will cover the employee, their spouse, and dependents. Who is eligible?Įmployers typically offer health FSAs as part of a “cafeteria plan.” Cafeteria plans allow employees to enroll in and contribute to certain benefits on a pre-tax basis.
In that case, you can spend up to that amount any time during the plan year, even if you have not yet contributed the full amount. For example, suppose you elect to contribute $2,000 for the plan year. This favorable tax treatment allows employees to reduce their taxable income and save on eligible expenses-the amount they would otherwise pay in taxes on that money.įSAs are also what’s known as “pre-funded,” meaning that funds can be used to pay qualified medical expenses before the contributions hit the account, up to the annual election amount. In addition, if employers also make contributions, those amounts aren’t included in employee gross income for tax purposes. The paycheck deductions are pre-tax, meaning funds contributed to a health FSA are not subject to income or payroll taxes. Health FSAs are employer-sponsored accounts that allow employees to contribute a portion of their paycheck to use for qualified medical expenses (e.g., copayments for doctor visits and prescriptions).