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13 qualifying life events that trigger ACA special enrollment
Outside of open enrollment, a special enrollment period allows you to enroll in an ACA-compliant plan (on or off-exchange) if you experience a qualifying life event.

Latest News & Topics

Latest News & Topics


Finalized federal rule reduces total duration of short-term health plans to 4 months
A finalized federal rule will impose new nationwide duration limits on short-term limited duration insurance (STLDI) plans. The rule – which applies to plans sold or issued on or after September 1, 2024 – will limit STLDI plans to three-month terms, and to total duration – including renewals – of no more than four months.
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flexible spending account (FSA)

What is a 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). This cap is rising to $3,200 in 2024.1 Employers have the option of setting limits that are lower (but not higher) than the IRS allows.

If your employer offers a medical FSA, you can choose to contribute any amount up to the applicable limit. And if your spouse is also offered an FSA by their employer, they have the option to contribute as well, potentially increasing your total household FSA contributions to as much as $6,400 in 2024.1

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. This means a qualifying event is necessary 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.

However, employers also have the option to let enrollees carry over some unused money into the next year. The maximum amount that can be carried over to the coming year is set by the IRS each year. Up to $610 can be carried over from 2023 to 2024, and up to $640 can be carried over from 2024 to 2025.1

Again, this is optional for employers, and they do not have to allow a grace period or carryover option. And they cannot offer more generous carry-over or grace period provisions than the IRS allows.

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).

Related articles

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.


  1. IRS: 2024 Flexible Spending Arrangement contribution limit rises by $150. Internal Revenue Service. December 2023.