Glossary · Accounts and tax
What is a flexible spending account (FSA)?
A flexible spending account is an arrangement through your employer that lets you pay many out-of-pocket medical expenses with tax-free dollars. You choose how much to put in, up to a limit your employer sets.
Definition and figures from IRS Publication 969 (2025), HealthCare.gov glossary, checked October 23, 2026. This page explains the term; it does not recommend a plan.
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FSA: the facts
| Item | Fact | Source |
|---|---|---|
| Salary reduction limit (2025) | $3,300 | IRS Publication 969 (2025): HSAs and other tax-favored health plans |
| Maximum carryover (2025) | $660, if the plan allows carryover | IRS Publication 969 (2025): HSAs and other tax-favored health plans |
| Allowed expenses (examples) | Copayments, deductibles, qualified prescription drugs, insulin, medical devices | HealthCare.gov glossary: Flexible Spending Account (FSA) |
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Questions
What does FSA mean in health insurance?
A flexible spending account is an arrangement through your employer that lets you pay many out-of-pocket medical expenses with tax-free dollars. You choose how much to put in, up to a limit your employer sets.
What happens to FSA money left at the end of the year?
Unused money can be lost unless the plan offers a carryover or a grace period. For 2025 the most a plan may let you carry over is $660.