What Is a Flexible Spending Account (FSA)?

A Flexible Spending Account (FSA) lets you set aside pre-tax dollars through your employer to pay for eligible medical expenses like copays, prescriptions, and dental costs. For 2024, the contribution limit is $3,200. The "use it or lose it" rule applies — money left over at year-end may be forfeited (employers can allow a small rollover or a grace period). Unlike an HSA, you can use the full annual amount on January 1, even before you've contributed it all. Estimate your medical costs carefully when deciding how much to contribute.