FSA
Health Care FSA: Allows you to set aside up to $2,850 a year through payroll deductions for payment of eligible health care expenses for you and your dependents.
Flexible spending accounts, or FSAs, provide you with an important tax advantage that can help you pay health care and dependent care expenses on a pre-tax basis. Essentially, the Internal Revenue Service (IRS) set up FSAs as a means to provide a tax break to employees.
As an employee, you agree to set aside a portion of your pre-tax salary in an account, and that money is deducted from your paycheck over the course of the year. The amount you contribute to the FSA is not subject to social security (FICA), federal, state or local income taxes — effectively adjusting your taxable salary.
The taxes you pay each paycheck and collectively each plan year can be reduced significantly, depending on your tax bracket. As a result of the personal tax savings you incur, your spendable income will increase.
Reminder: You may rollover up to $550 into the next plan year, but any amount over $550 in your account at the end of the plan year is forfeited.
Dependent Care Flexible Spending Account (FSA)
Dependent Care FSA
Allows you to set aside up to $5,000 if married/single or $2,500 if married-filing separate through payroll deductions for eligible dependent care expenses.