What Is a Flexible Spending Account (FSA)?

A Flexible Spending Account (FSA) is a tax-advantaged account that allows employees to set aside pre-tax dollars for qualified medical expenses. FSAs are offered through employers and can be used for doctor visits, prescriptions, medical supplies, and more.

How does an FSA work?

• Funded by employee contributions: Money is deducted from each paycheck before taxes.
• Use-it-or-lose-it rule: Most FSAs require funds to be used within the plan year, though some offer a short grace period or allow limited carryover.
• Covers a wide range of expenses: Can be used for co-pays, deductibles, prescriptions, and even some over-the-counter medications.

FSA vs. HSA—What’s the difference?

• FSAs are employer-sponsored, while Health Savings Accounts (HSAs) are available to individuals with high-deductible health plans (HDHPs).
• FSAs have a "use-it-or-lose-it" policy, while HSA funds roll over each year and can grow over time.
• FSAs don’t require a high-deductible plan, making them more accessible for many employees.

Can Medicare Beneficiaries Use an FSA?

While Medicare recipients cannot contribute to an HSA, they may still use an existing FSA to cover eligible healthcare costs, such as prescriptions, medical equipment, and co-pays for Medicare-covered services. Some retirees with employer-sponsored benefits may still have access to FSA funds after retirement, depending on their plan.

How Solace can help

A Solace advocate can help you maximize your FSA benefits, understand what’s covered, and ensure you use your funds before they expire. If you’re transitioning to Medicare, an advocate can also help clarify how your FSA works alongside other healthcare options.

What to do next

Have questions about your FSA or how to use it before the deadline? Find a Solace advocate today.