How to size your FSA election
A health FSA lets you set aside up to $3,400in 2026 before income and payroll tax, then spend it on eligible medical costs — effectively a discount equal to your tax rate. The catch is that FSAs are largely “use it or lose it,” so the goal is to elect close to what you’ll actually spend: enough to capture the tax break, not so much that you forfeit unused funds.
Enter your expected eligible expenses and tax bracket below to see a suggested election, your estimated savings, and your forfeiture risk after any carryover.
Estimatethis figure is an editorial estimate based on cited public sources — not a quote, not personalized advice, and not a guarantee of what any insurer will offer you.
Frequently asked questions
What is the 2026 health FSA contribution limit?+
For plan years beginning in 2026, the IRS limit on employee pre-tax contributions to a health FSA is $3,400, up from $3,300 in 2025 (IRS Rev. Proc. 2025-32). If both spouses have their own employer's FSA, each can generally contribute up to the limit. Your specific plan may set a lower cap, so check your enrollment materials.
How do FSA tax savings work?+
FSA contributions come out of your paycheck before federal income tax and, for most people, before the 7.65% FICA payroll tax — so a dollar in your FSA effectively costs less than a dollar of take-home pay. Your savings equal your contribution times your combined marginal rate (federal income tax plus FICA, plus state tax where it applies). At a 22% federal bracket, that's roughly 30% off eligible costs.
What does 'use it or lose it' mean for an FSA?+
Health FSA funds generally must be spent within the plan year or they're forfeited. Employers may offer one of two softeners — a carryover of up to $680 into the next plan year (for 2026), or a grace period of up to 2.5 extra months to spend the funds — but not both, and some plans offer neither. Because of this, you should elect close to what you realistically expect to spend.
What's the difference between an FSA and an HSA?+
An HSA requires a qualifying high-deductible health plan, the money is yours and rolls over forever, and it can be invested. A health FSA has no HDHP requirement, is owned by the employer's plan, is largely use-it-or-lose-it, and generally can't be kept if you leave the job. FSAs suit predictable near-term expenses; HSAs suit longer-term, tax-advantaged saving. You usually can't have a general-purpose FSA and contribute to an HSA in the same year.
What expenses are FSA-eligible?+
Qualified medical expenses — deductibles, copays, coinsurance, prescriptions, dental and vision care, and many over-the-counter items and supplies. Premiums are generally not FSA-eligible. The IRS defines eligible expenses and your plan administrator applies them, so confirm a specific item before you rely on it.
Related guides and tools
Jennifer Walsh
Editorial Lead, Health & Medicare
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 August 2026
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