Flexible spending account

In the United States, a flexible spending account (FSA), also known as a flexible spending arrangement, is one of a number of tax-advantaged financial accounts, resulting in payroll tax savings.^[1] One significant disadvantage to using an FSA is that funds not used by the end of the plan year are forfeited to the employer, known as the "use it or lose it" rule. Under the terms of the Affordable Care Act however a plan may permit an employee to carry over up to $550^[2] into the following year without losing the funds but this does not apply to all plans and some plans may have lower limits.

The most common type of flexible spending account, the medical expense FSA (also medical FSA or health FSA), is similar to a health savings account (HSA) or a health reimbursement account (HRA). However, while HSAs and HRAs are almost exclusively used as components of a consumer-driven health care plan, medical FSAs are commonly offered with more traditional health plans as well. Paper forms or an FSA debit card may be used to access the account funds.