A Flexible Spending Account (FSA) is a special account you put money into that you use to pay for certain out-of-pocket health care costs, such as copayments, deductibles, some drugs and some other health care costs, but not insurance premiums.
You do not pay taxes on this money. This means you'll save an amount equal to the taxes you would have paid on the money you set aside.
Under the Health Care FSA plan, you are allowed to carry over of a minimum of $50 to a maximum of $500 per year to use in the following year.
If your spouse's employer also provides an FSA benefit, your spouse can also contribute up to the maximum amount annually into a separate FSA account.
If you are enrolled in a CDHP (high deductible) health plan, you may only enroll in the Limited Health Care FSA. The Limited Health Care FSA can only reimburse for dental, orthodontia, vision and preventative care expenses.
2020 FSA maximum deduction: $2,750/annually