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Flexible Spending Account: Basic Information

Also known as a flexible spending arrangement, a Health FSA is a type of tax-advantaged savings account. An employer will pre-fund the account once the employee chooses the annual contribution amount during open enrollment.

Pre-tax deductions are then taken from the employee’s payroll throughout the year to repay the employer for those upfront costs. Health FSA funds expire if they aren't used by the end of the plan year unless the company offers extension options such as rollover or grace period.

There are two types of Health FSAs: Limited Purpose and General Purpose. A General Purpose Flexible Spending Account (GPFSA) will cover all eligible medical, dental, vision, & pharmacy expenses while a Limited Purpose FSA (LPFSA) will only cover eligible dental and vision expenses.

Health FSAs can be spent on eligible medical, dental, vision, and pharmacy expenses. like chiropractic care, acupuncture, and much more. To learn more about eligible medical expenses:

If your FSA is managed by Gusto, visit your Gusto Benefits Card Manager portal to review transactions, claims, and more. If your FSA is not managed by Gusto, add the benefit to take pre-tax deductions to payroll and manage the funds externally. 

Note for employers: In order to purchase and provide a Flexible Spending Account through Gusto, you must first have medical insurance managed by Gusto.

Pre-tax Limits

Health Flexible Spending Arrangements (includes limited-purpose FSAs)

2019

2020

Maximum Annual Limit

$2700

$2750

Rollover Option: An employer can choose to have up to $550 of an employee's funds from the previous plan year roll into the new plan year. This means that up to $550 of your FSA will not be lost once the plan year has ended

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