Flexible spending accounts

Flexible spending accounts (FSAs) offer you a way to budget and pay for medical and dependent care expenses, while reducing your employer’s payroll tax burden.

Benefits for you and your employer

An FSA empowers you to make smart spending decisions. It can also add value to an existing benefits package, which can help employers attract and retain employees like you.

Additional benefits for you and your employer include:

  • Tax savings — You and your employer save on taxes because your taxable income is reduced by the amounts you deposit into your accounts, up to IRS limits.
  • Reduced administration — You can manage key aspects of your accounts online, and our simple claims and reimbursement process eases the administrative burden for you and your employer.
  • Savings when you need it —You can set money aside for important health and dependent care expenses.

How it works

With an FSA, you save money by reducing your taxable income and budgeting for health care costs. The process works like this:

  • First, make regular pretax contributions to the account from your paycheck.
  • Then, use the linked debit card to pay for health care. Or you can pay for qualified expenses out-of-pocket and reimburse yourself from your FSA.

Individual savings example

In this example, you've elected to have $100 withheld from your paycheck every pay period and deposited into an FSA.

Federal income tax – 25% $25.00
State income tax – 5% $ 5.00
FICA – 7.65% $ 7.65
Tax savings every paycheck $ 37.65
Tax savings annually (24 pay periods) $903.60


Estimating costs

You should estimate your annual FSA contributions carefully because you will lose any funds remaining at the end of the year. That said, even if you leave funds behind, most people still come out ahead due to the tax savings.


HSA, FSA, HRA: WHAT'S THE DIFFERENCE?

Learn how an FSA compares to a HRA and HSA, and decide which option is best for you and your family.
 Compare health accounts


EMPLOYERS: OFFER AN FSA

Contact an Optum sales representative to learn more about offering FSAs to your employees.

 Email inquiry@optum.com
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