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What are the deadlines for the ACA’s open enrollment period?
A list of the open enrollment deadlines for enrollment in 2024 ACA-compliant health insurance in every state. Open enrollment runs from November 1 to January 15 or January 16 in most states, but some state-run exchanges have different schedules.

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flexible spending account (FSA)

What is a flexible spending account (FSA)?

A flexible spending account (FSA) is a tax-advantaged account maintained by employers where employees can set aside a portion of each paycheck to pay for out-of-pocket medical expenses. No payroll taxes are due on funds allocated to an FSA, and the employee can use the money, tax-free, to pay for qualified medical expenses throughout the year.

FSAs can be used in conjunction with any type of health plan (unlike HSAs, which can only be contributed to if the person has coverage under an HSA-qualified high-deductible health plan).

Learn about how an FSA differs from an HSA.

How much can you contribute to an FSA?

Starting in 2013, the Affordable Care Act capped the amount that workers could set aside in their FSAs. In 2023, the cap is $3,050 (up from $2,850 in 2022).

When can you make changes to your FSA contribution?

Employees have to decide before the start of the plan year (during open enrollment) whether they want to contribute to their FSA, and if so, how much they want to contribute. The amount is then divided out across the employee’s paychecks for the whole year, although the full amount is available for withdrawal as of the first day of the plan year.

Normally, employees cannot make changes to their FSA election during the plan year unless they have a qualifying life event. But in response to the COVID-19 pandemic, employers were allowed (but not required) to relax these rules in 2020 and 2021. As of 2022, however, the normal rules were once again in place for all employers. So a qualifying event is necessary in order to make a mid-year FSA election change.

What happens to unused money in an FSA?

There is a “use-it-or-lose-it” requirement with FSAs: Any money left in the account at the end of the plan year (or by March 15th of the following year if the employer offers a grace period) is lost to the employee. So it’s important to only allocate for expenses that you know you’ll incur (instead of a grace period, employers can opt to allow employees to carry over up to $500 in unused FSA funds from one plan year to the next).

For 2020 and 2021, the rules were relaxed in response to the COVID pandemic. The 2021 Consolidated Appropriations Act allowed employers the option to let employees roll over any amount of unused FSA amounts from 2020 to 2021, and from 2021 to 2022, for use at any time during the year (note that employers could offer this but were not required to do so).

As of 2022, the regular rules were once again in place. Employers can offer the normal 2.5-month grace period or a $500 rollover at the end of the year, if they choose to do so. But they cannot offer more generous carry-over provisions.

What can FSA funds be used for?

FSA funds can be used for qualified medical expenses. As of 2011, the ACA prohibited the purchase of over-the-counter medications with FSA funds, unless a doctor wrote a prescription for them. But Section 4402 of the 2020 Coronavirus Aid, Relief, and Economic Security (CARES) Act changed that. The CARES Act eliminated subsection (f) of Section 106 of the Internal Revenue Code. That section had previously prohibited the purchase of non-prescription over-the-counter medications with FSA money (it used to say “reimbursement for expenses incurred for a medicine or a drug shall be treated as a reimbursement for medical expenses only if such medicine or drug is a prescribed drug (determined without regard to whether such drug is available without a prescription) or is insulin.” That provision was eliminated under the CARES Act).

Section 4402 of the CARES Act also changed the rules to allow menstrual products to be purchased with FSA funds. The new rules that allow FSA funds to be used for over-the-counter medications and menstrual products are retroactive to January 1, 2020, and are permanent changes (ie, they will remain in place even after the COVID-19 emergency period ends).

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A health savings account is a tax-advantaged savings account combined with a high-deductible health insurance policy to provide an investment and health coverage. 

The HSA is a Swiss-Army knife of tax-advantaged accounts, a financial tool for paying medical expenses with pre-tax dollars ... or saving for the long term.

HSA-qualified high deductible plans fit easily within the guidelines established by the ACA.

Both FSAs and HSAs are tax-advantaged accounts that allow people to save money to pay for qualified medical expenses, but they have several key differences.
Buying a reliable health insurance policy is just one step toward a financial strategy that can protect your health, save money, and invest for the future.