Everything you need to know about your FSA and how to make the most of it

If you're looking to save money on medical expenses, a flexible spending account (FSA) could be the answer. With an FSA, you can use pre-tax money for medical, dental, vision and other health care costs insurance doesn't cover, including co-pays, deductibles, prescriptions, over-the-counter medications and much more.

An FSA is an employer-sponsored plan, so you can only set one up if it's offered by the company you work for. And you can usually only sign up during the open enrollment period.

An FSA is a workplace-sponsored account that allows you to set aside pre-tax dollars for medical expenses. For example, if you owe 30% in state and federal income taxes and contribute $1,000 to your FSA, you save $300 by putting that money in an FSA and using it for doctor bills and prescription drugs. 

By contributing to an FSA, you also reduce your taxable income. There are online calculators available to help you calculate how much money you'll save in taxes by contributing to your FSA.

FSA funds can be used for a wide variety of purchases, including allergy medicine, acne treatments, feminine hygiene products, suntan lotion and Oura rings. Websites like FSA Store and Amazon highlight FSA-eligible products. 

For 2026, an individual can contribute up to $3,400, with a carryover of $680 from the year prior. Rollover rules are set by employers, so check with your company to find out if you need to use your funds before the year ends. (Employers may also provide a grace period or extension to use your funds.)

Once you settle on how much to contribute to your FSA, your employer will withdraw a small amount each pay period over the course of the year. But don't worry, you don't have to have the full amount in your account to start using it.

If you've set aside $500 for the year, but your account only has $250 in it, you can still have access to the full amount. FSAs work like a line of credit, only you don't need to worry about paying it back.

How much you should contribute to an FSA depends on your personal circumstances. For example, if you're pregnant or have a medical diagnosis that requires frequent doctors' appointments, you might consider contributing more to your FSA to cover medications or copays.

On the other hand, if you're relatively healthy and only plan on going to the doctor for your annual wellness exam, you might contribute less.

Since FSAs are employer-sponsored, you should consider whether you're planning to quit your job within the next year. If so, you would need to spend any FSA money before you left.

Both are employer-sponsored accounts that allow workers to contribute pre-tax money, but they serve different functions.

A Health Care FSA pays for medical, dental and vision expenses for you and your dependents, including co-pays, deductibles, prescriptions, glasses and over-the-counter medication. The money is typically available at the start of the plan year and some limited funds may be able to roll over.

A Dependent Care FSA is used for qualified expenses for dependent children under the age of 13 or for a spouse or relative who is unable to care for themselves. Dependent-care expenses can include daycare, eldercare, preschools or summer day camps.

The contribution limits on Dependent Care FSAs are higher. In 2026, they are $7,500 for single individuals and married couples filing jointly and $3,750 for married individuals filing separately. But unlike a Health Care FSA, only the money you have contributed so far is available.

Both FSAs and health savings accounts (HSAs) can be used for medical expenses not covered by health insurance. However, an HSA is only available to people with a high-deductible health plan (HDHP).

HDHPs are typically a good option for healthy individuals who don't have many medical expenses and don't anticipate meeting their annual deductible.  

Unlike an FSA, an HSA is portable, so you can take it from employer to employer and you can also roll over 100% of your contributions from year to year. The HSA contribution limit is also higher:  $4,400 for self-only coverage and $8,750 for family coverage. If you're 55 or older, you can contribute an additional catch-up contribution of $1,000.

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