Flexible Spending Accounts
Contributions to an Optum Flexible Spending Account (FSA) for healthcare and dependent care expenses are tax-free, allowing you to save money on your federal and state income taxes and Social Security taxes. You must enroll each year in order to have one or more FSAs.
If you don’t have access to an HSA, you’re eligible to have a Healthcare FSA to cover healthcare, prescription drug, dental and vision expenses. You can contribute up to $2,700a year.
Dependent Care FSA
A Dependent Care FSA can help you pay dependent care expenses. These include daycare expenses and summer camps for children under age 13 and care for an elderly parent. You can contribute up to $5,000 a year or $ 2,500 if you’re married and file separate income tax returns.
Limited Purpose FSA
Those enrolled in the Consumer Choice HSA healthcare plan can contribute up to $ 2,700 annually to a Limited Purpose FSA, which can be used for eligible dental and vision expenses only.
Plan carefully! IRS rules require you to forfeit any balance left in your FSAs at the end of the year — the “use it or lose it” rule. Ordinarily, you must incur eligible expenses by December 31, 2020, and submit them for reimbursement before April 1, 2021. However, there will be a grace period in 2020, so you can use remaining 2020 funds to pay for 2021 expenses incurred through March 15, 2021.
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