After a tumultuous year of financial issues, many people are looking for new ways to help make money and then keep it. One options is a flexible spending account.
A flexible spending account is also known as a FSA.
There are different things that go into having a FSA, but you can find out if it’s a good choice for you or not.
Flexible spending account explained
A FSA is an employee benefit.
It lets you withhold pre-tax dollars from your paycheck for healthcare costs.
Aside from medical costs, you can also use the contributions to pay for health and wellness items like over the counter pain relief medications or baby health products.
You could save up to 30% in taxes.
How do I use my FSA?
A FSA is a lot like a savings account.
You’ll open the account during open enrollment where you will then decide how much of your paycheck you want to contribute.
In 2021 the limit to contribute was $2,750 and in 2022 it’s $2,850.
Some employers can contribute on your behalf but it is not required of them.
Health Savings Account vs. Flexible Savings Account
A flexible spending account and health spending account are very similar.
The accounts are often mistaken for one another.
Both accounts let clients use pre-tax dollars to pay for medical costs.
Differences are qualifications, contribution limits, rules and withdrawal penalties.
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