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ARTICLE · 16 JUNE 2023

Flexible Spending Accounts: Use Them, Don't Lose Them

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Health care FSAs allow participants to set aside pretax funds (up to $3,050 in 2023) to pay for qualified health care expenses.

United StatesWealth Management
Adam Levine, CPA
Adam Levine, CPA
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Health care FSAs allow participants to set aside pretax funds (up to $3,050 in 2023) to pay for qualified health care expenses. Essentially, these plans allow you to deduct these expenses even if you do not itemize. There is a catch, though: An FSA is a "use it or lose it" proposition. Funds remaining in the account at the end of the year are forfeited.

To provide employees with some relief from possible forfeiture after year end, IRS rules allow health care FSAs to either 1) permit employees to carry over up to $610 in 2023 to the following year; or 2) give employees a 2½-month grace period to spend leftover funds. However, employers are not required to offer these options, so be sure to check the terms of your FSA plan.

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