Flexible spending account
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In the United States, a flexible spending account (FSA), also known as a flexible spending arrangement, is a type of tax-advantaged financial account first established in 1978. One significant disadvantage to using an FSA is that remaining funds in excess of a specified amount that are not used by the end of the plan year are forfeited to the employer, known as the "use it or lose it" rule. Before the 2010 Affordable Care Act, no funds could be carried over at all, while as of 2025, a plan may permit an employee to carry over up to $660 into the following year without losing the funds, but this does not apply to all plans, and some plans may have lower limits.
The most common type of flexible spending account, the medical expense FSA (also medical FSA or health FSA), is similar to a health savings account (HSA) or a health reimbursement account (HRA). However, while HSAs and HRAs are almost exclusively used as components of a consumer-driven health care plan, medical FSAs are commonly offered with more traditional health plans as well. Paper forms or an FSA debit card may be used to access the account funds.