HomeEmploymentWhy I Love Flexible Savings Accounts

Why I Love Flexible Savings Accounts

My employer offers me a Flexible Savings Account (FSA) and if you have the opportunity, you should take advantage of it.

What is an FSA?

The Health Care FSA allows you to set aside up to $5,000 of your income before any taxes are withheld for reimbursement of eligible health, dental, and vision expenses which are not paid by a health plan. The expenses must be incurred by you or your dependents (for federal income tax purposes). Anything you pay out of your own pocket for eligible medical care, such as deductibles, copays, eye exam fees, eye glasses/contacts costs, some over-the-counter drugs, and dental expenses such as orthodontia, are usually reimbursable expenses.

Why do I love it so much?

The FSA not only comes out of your salary pre-tax, but it is basically a way of budgeting for health expenses. Sometimes we should plan for them, such as dental appointments and regular doctor appointments. Others, however, we don’t see. In emergencies, we often have to pay out of pocket for certain expenses. I advocate setting aside a little bit of money for medical expenses so we’ll be prepared when something happens.

An FSA does the budgetting for us by taking out a little big from each paycheck and in return we get a debit card that we can use for health expenses. The best part? Instead of like my budget where I set aside money each money and after a year I have a hefty sum, the FSA gives you the money upfront and then takes money over the course of the year. So your mind is immediately put at ease and you don’t need to worry about coming up with cash should something happen.


When leaving an employer, the rules vary, but often times you can use the total amount designated for the FSA at the beginning of the year, while at times you may not use the remaining money in your FSA after the termination of your employment.



  1. Funds in FSA that are unused at the end of the year are no longer available the next year. Use it or lose it is not a risk I like taking with my $

  2. Rachel hit the nail on the head. Have you looked into HSAs or alternatives to the FSA? The use-it-or-loose-it feature could easily mean that if you don’t spend it your employer gets it not you. You’ve touched on some great benefits here what about the disadvantages? Don’t you think those are worth mentioning?

  3. Good point, I think that HSAs are definitely an advantage, but I’m not so lucky to have one. What I do is slightly overestimate what I’ll need. I use it for all medicines, doctor and denstist appointments, eye exams, contact lenses, and glasses, and then add a small amount on top in case of emergencies. That way, I know that if I have more expenses than expected, I’ll still save ~25% on the first several hundred in expenses. One of the nice things about my FSA is that if I have money left over, I can use it through the end of March, so by open enrollment (mid-October of the following year) I am able to see how much I should adjust for the coming year (and use unused funds from January until March).

    Evan, do you have an FSA or HSA that you can participate in?

    Rachel, what do you think about putting in just enough for what you know you’ll use: regularly schedules appointments such as dentist and check-ups?

  4. FSAs save my butt every year. Just figure out how much you spent LAST year on medical, etc. This is copays, and other uncovered medical, dental, vision expenses. Halve it. Then feel comfortable that you’ll never leave any money on the table. For our family, we blow through the 5K in about 6 months and then have 6 more months to “pay it off” kinda like an interest free loan.

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