Q. "What is a health flexible spending account?"
Answer:
A health flexible spending account (HFSA) lets employees set aside pre-tax money from their paycheck during the year, and use it to pay for eligible healthcare expenses for themselves, their spouse, or their dependents. Funds in these accounts are typically "use it or lose it," with some exceptions, based on the employer's plan design.
Employees can use HFSA funds for many healthcare-related costs allowed by the IRS, such as insurance plan deductibles and copays, prescriptions and over-the-counter drugs and medications, dental and vision care, and chiropractic services. Payments for these services can be made directly to the healthcare provider or retailer using a debit card linked to the account or by filing for reimbursement with the HFSA provider.
These accounts allow employees to set aside pre-tax money for planned medical expenses while also providing upfront access to funds to help employees manage unexpected medical expenses more effectively.