Health Insurance
FSA (Flexible Spending Account)
An FSA reduces your taxable income by letting you set aside pre-tax money for predictable medical costs, but unspent funds generally expire at year-end.
Last reviewed: May 2026 · Editorial methodology
Definition
A Flexible Spending Account (FSA) is an employer-offered benefit that allows employees to set aside pre-tax payroll dollars — up to the IRS annual limit — to cover qualified out-of-pocket medical, dental, and vision expenses. The 2026 employee contribution limit is $3,300. One important distinction from an HSA is that FSA money is generally 'use-it-or-lose-it': funds not spent by the plan year deadline are forfeited, though employers may offer a grace period of up to 2.5 months or allow a rollover of up to $660 (2026 IRS limit). Unlike an HSA, FSAs do not require enrollment in an HDHP, making them accessible to anyone with employer-sponsored health insurance. The entire elected FSA amount is available on day one of the plan year, which can be useful for front-loaded expenses like surgery early in the year. FSA funds cannot be invested or grown like HSA balances and are not portable if you leave your employer mid-year.
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Cover Forge USA Editorial Team
Editorial Lead
This article was researched and written by the Cover Forge USA editorial team against federal sources (NAIC, CMS, FEMA, DOL, SSA, state DOIs) and standard policy forms. Bylines organize content by topic — they do not assert individual licensure. See our editorial-policy for details.
Reviewed 2026-06-14
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