• Sasha Kudler

How to Budget For Your FSA



As we close in on summer, those looking to make the most out of their employee benefits should start budgeting next year’s FSA. If you’re not sure what that means, or you’re not sure where to start, we’re here to help! The best place to get started when it comes to budgeting for your FSA is an online calculator — like the one we provide here, or the one provided by the FSA Store. These should give you a basic idea of what you could be saving, if you were using your FSA to really take advantage of your benefits. Of course, crunching the numbers is different than really understanding how you can make your flexible spending account work for you. Here’s a breakdown of what your FSA is, what you can use it for, and how it can help you save on next year’s taxes: What is an FSA? FSAs—or flexible spending accounts—are special accounts that eligible employees can allocate pre-tax dollars to throughout the year, using those dollars to pay for pre-approved expenses, like medical care not already covered under their health insurance. There are a few different types of FSA, but the two primary ones are Health FSAs, which cover eligible healthcare expenses, and Dependent care FSAs, which can cover expenses like childcare and summer camps. Because that money is set aside from your paycheck before taxes can be taken out, you can actually save quite a bit from year to year, if you budget correctly! Generally speaking, the annual limit for an FSA is $2,750 and the full amount will be available for use at the beginning of the year, courtesy of your employer. What FSAs Can Cover FSAs can cover a wide variety of costs, including the following:

  • OTC Medications (acne meds, antibiotics, cold/flu medicine, etc.)

  • Sunscreen with SPF +15

  • Vaccinations

  • Acupuncture

  • Chiropractic care

  • Deductibles (e.g. for vision or dental plan)

  • Eyeglasses (both prescription and OTC)

  • Some surgeries (e.g. laser eye surgery)

  • Flu shots

  • Menstrual care products

  • Therapy (for treatment of a medical condition)

For a more comprehensive list, reach out to whoever administers your FSA, or check out the FSA eligibility list here.

How to Get the Most Bang for Your Buck


Considering how many easy and practical ways there are to spend your FSA budget, coming out ahead while using an FSA might seem like a no-brainer, but there are still some simple things you should keep in mind.

First and foremost, budgeting is essential. Many employers do their best to make your FSA as easy to spend as possible, allowing annual carryovers of up to $500 ($550 this year, thanks to new IRS rules), and sometimes providing a grace period at the end of the plan year. With that in mind, if you're not sure what your budget is going to look like or when you'd want to spend it, a minimum budget of $550 for this year would be a safe bet.

As far as reimbursement goes, the process is relatively straight forward. The most important thing to remember is to hang on to all receipts for FSA eligible items, as well as doctors notes for any items requiring further documentation. It’s also important to remember that it’s your employer who owns your FSA account, not you — so if you’re planning on leaving your job at some point during the year, be sure to budget accordingly.

For more information on how to calculate your budget—and what you can spend it on—feel free to use this spreadsheet we've created! If you have any other questions, we'd be happy to help via support@getbenepass.com.

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