A Flex Spending Arrangement (FSA) is a benefit that allows an employee to redirect a portion of their pay, through the convenience of equal, pre-tax payroll deductions, to create a spending account for healthcare and/or dependent care expenses. This means that the money is deducted from your pay before Federal, State/Local (most) and Social Security/Medicare Taxes are calculated. Because you do not pay these taxes on money that goes into your spending accounts, you decrease your taxable income - and increase your take home pay.
You can enroll in a Medical Reimbursement Account and/or a Dependent Care Account. In estimating your separate election amounts, remember all expenses must be incurred between January 1, 2016 and December 31, 2016. Estimate conservatively, as unused funds at that end of the plan year are forfeited (see below for the Medical Grace Period). Medical and Dependent Care amounts are not "transferable" between accounts.
Medical Reimbursement Account (MRA)
An MRA allows you to contribute up to $2.550 to help you pay for eligible medical/dental/vision expenses that are not paid by insurance. It does not replace an insurance plan, but it can help you get more for your money by using pre-tax dollars on out-of-pocket health care services. *REMINDER - Any unused dollars at 12/31 are eligible for a Grace Period into the following year and will be available to use for Dates of Service thru March 15th of the following year.
Dependent Care Account (DCA)
The DCA allows you to contribute up to $5,000 per year into a DCA, or up to $2.500 if married and filing separately, for eligible dependent care. The "use it or lose it" rule applies to the DCA and there is no Grace Period.
Flex Spending Resources
Flex Spending Video Resources