What is an FSA (flexible spending account)?
Pre-tax money for medical costs, through your job, with a deadline to spend it.
Last checked October 15, 2026 · Written by licensed advisors · Sources are numbered and listed under Notes and sources
The short answer
A health flexible spending account is an account you set up through your employer. You choose an amount for the year, it comes out of your paycheck before taxes, and you spend it on medical costs such as copays, prescriptions, glasses and dental work.1
The use-it-or-lose-it rule
Money left at the end of the plan year is generally lost. Employers may soften this in one of two ways: a short grace period to spend it, or letting you carry a limited amount into the next year. Your employer decides which, if either.1
- Start of plan yearYou choose an amount; it comes out of your paycheck before taxes
- During the yearSpend it on copays, prescriptions, glasses, dental work
- End of plan yearMoney left is generally lost, unless your employer offers a grace period or a carryover (key step)
FSA vs HSA
An FSA comes only through an employer, doesn’t require a high-deductible plan, and mostly has to be spent within the year. You can’t use one with a Marketplace plan. An HSA needs a high-deductible plan (since 2026 that includes any bronze or catastrophic Marketplace plan), belongs to you, rolls over every year and stays with you if you leave the job. If you are self-employed, you can’t have a health FSA for yourself, but you may be able to open an HSA.231
- Only through an employer
- No high-deductible plan needed
- Mostly spent within the year
- Not with a Marketplace plan
- Needs a high-deductible plan (any bronze or catastrophic Marketplace plan since 2026)
- Belongs to you
- Rolls over every year
- Stays with you if you leave the job
Related guides
Obamacare Hotline and/or Medicare Po Polsku are private companies not affiliated with any local, state, or federal government agency. This guide is general information, not tax or legal advice.