How These Accounts Work

Here’s a step-by-step look at how these accounts work.

Step 1: Decide How Much To Contribute

With the Healthcare FSA, you can add up to $3,050 in 2023 and $3,200 in 2024.

With the Dependent Care FSA, you can contribute up to $5,000 a year ($2,500 if you are married but file separate tax returns).

With both accounts, your contributions come out of your paycheck before taxes.

Step 2: Pay for Eligible Expenses

With the Healthcare FSA, you can use your debit card to pay for care. You have access to the full amount you contribute for the year up-front.

With the Dependent Care FSA, you can use your debit card to pay for care if funds are available. You can also pay the expense up-front and then file a claim for reimbursement. You must have the money in your account before you can receive reimbursement.

Know the Ins and Outs

Keep these rules in mind.

  • Use it or lose it! You lose any FSA money you don’t use by December 31, 2023. You have until March 31, 2024, to request reimbursement and file claims for 2023 expenses. Any remaining amount will be forfeited. For the Healthcare FSA only, you can roll over $610 of unused funds to the next year.
  • No interest and you can’t take it with you. The money in your FSA does not earn interest, and you can’t take it with you if you leave the company.
  • Keep your receipts! Make sure to keep your receipts in case you need to verify your purchase.

Tax Advantages x 2@Work

FSAs have double tax advantages.

  • Pre-tax savings. Your contributions come out of your paycheck before your taxes are taken out, which means you pay less in taxes.
  • Tax-free withdrawals. When you use the money for eligible expenses, there are no taxes to pay.

FSAs at Glance

Here are the need-to-know details about the accounts.

Healthcare FSA Dependent Care FSA
Who can use it If you not enrolled in a CDHP or you are not eligible for a Health Savings Account (HSA) If you have dependent care expenses so you (and your spouse, if married) can work, look for work or attend school full time
How much you can add Up to $3,050 in 2023
Up to $3,200 in 2024
Up to $5,000 a year ($2,500 if you are married but file separate tax returns)
Whose expenses are eligible Yours, your spouse’s and your eligible dependents’ Your children under age 13 who qualify as dependents on your federal tax return, a spouse or unmarried child of any age who is physically or mentally incapable of self-support, and other family members who are physically or mentally incapable of self-support, who live with you for more than half the year and who qualify as dependents on your federal tax return
What you can use it for Eligible medical, prescription drug, dental and vision expenses.

For a complete list of covered expenses, visit the IRS site.

Eligible dependent care expenses such as licensed nursery schools, licensed day care centers for children and disabled dependents, after-school care and services from a care provider (must be age 19 or older and not claimed as a dependent on your federal tax return)

For a complete list of covered expenses, visit the IRS site.