Flexible Spending Account

Also called a flexible spending arrangement, an FSA can be used to cover certain expenses with pretax money. A health care FSA can be used for medical expenses, over-the-counter items, dental care and vision care, while a dependent care FSA can be used for services like preschool, summer day camp and day care for a child or dependent adult.

The amount you decide to contribute to the account for the year is deducted from your salary before income taxes. This deduction reduces your taxable income, saving you money on taxes.

You may have to submit receipts and documentation for reimbursement, or you may use an FSA debit card to pay for expenses as you go. You can use your FSA for your own expenses or expenses incurred by your spouse or any dependents you claim on your taxes. You can also use health care FSA funds for any adult children on your health insurance plan who will be 26 or younger on December 31.

A health care FSA can be useful for people with any level of health costs. If you have predictable, ongoing medical expenses during the year, or regular over-the-counter spending, using pretax dollars for those costs lowers your bottom line.

Dependent care FSAs are useful if you're paying for care for a child or dependent adult while you work. The average parent reports spending 22% of their household income on child care, so to the extent that you can pay some of that money pretax, that's an advantage.

To decide if an FSA is right for you, take stock of your health and dependent care spending. If you have any ongoing or expected medical needs you might have to pay for in the upcoming year, an FSA is a great use of your money. The funds can also be used for over-the-counter items such as allergy and sinus drugs, first-aid supplies, digestive health products and home COVID-19 tests. A dependent care FSA can be used for day care and preschool expenses, but also for things like summer day camp and before and after-school programs offered by certified providers.

While you can’t use your health care FSA for insurance premiums, you can use it for copayments, coinsurance, deductibles, prescription medications, over-the-counter drugs, menstrual products and dental and vision care.

Health care FSAs can be used toward medical equipment, treatments and over-the-counter items such as:

• Medications prescribed by a doctor
• Blood sugar testing supplies
• Birth control
• Cold and flu medicine
• Breast pumps
• Pregnancy tests
• Menstrual pads and tampons
• Insulin
• Bandages
• Crutches
• Reading glasses
• Acupuncture
• Pain relief drugs
• Sunscreen
• Chiropractors
• Psychological treatment
• Smoking cessation programs

You cannot use your health care FSA to pay for CBD products, vitamins (unless they're prenatal), or cosmetic procedures. In some instances, such as for orthopedic shoes or nutritional counseling, you may need a doctor’s referral to prove you really need the covered treatment.

You can use your dependent care FSA for expenses connected to work-related care of children under age 13 or adult dependents who can’t care for themselves.

Eligible dependent care expenses may include:

• After-school programs.
• Babysitting (work-related).
• Day camp.
• Nanny.
• Nursery school.
• Preschool.
• Adult or senior day care.

You cannot use dependent care FSA money to pay for tutoring, sleep-away camp, or school tuition.

FSA Planning Worksheet

Health care FSA

You can contribute up to $3,400 in 2026.

Carefully read through the details of your employer-offered health insurance to learn about the cost of copays and coinsurance. If you have any underlying conditions, such as asthma or diabetes, factor in how much you’ll pay for your medications. Then consider your other needs as well. For example, you could use funds for dental or vision care (including copays), plus a wide variety of over-the-counter items.

Health care FSA expenses may be reimbursed immediately upon filing a claim, up to your annual commitment, regardless of whether how much has been deducted from your pay.

Dependent care FSA

You can contribute up to $7,500 to a dependent care FSA in 2026 if you file taxes as an individual or as a married couple filing jointly, or up to $3,750 if you’re married filing separately. This limit applies to married couples as a unit, so a married couple can contribute only up to $7,500 total.

Dependent care expenses may be reimbursed only to the extent that deductions have been taken from your pay.

FSA balances will expire

FSAs are “use or lose,” meaning the amount in your account will expire at the end of the year. With both dependent care and health care FSAs, there is a grace period of 3 months into the following year to submit claims incurred by the end of the previous plan year.