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10 Pros And Cons Of Flexible Spending Accounts

In this post, we will analyze the primary advantages and disadvantages of Flexible Spending Accounts (FSAs) to help you determine if signing up for one is the best decision for you.

5 Pros Of Flexible Spending Accounts

You Can Save On Taxes

The money you contribute to your FSA is deducted from your paycheck before taxes are taken out. This means that you’re able to reduce your taxable income, and as a result, you may end up paying less in taxes overall.

You Can Use It for a Variety of Expenses

An FSA can be used to cover a wide range of medical and dental expenses, including co-pays, prescription drugs, and even over-the-counter medication. In some cases, you may also be able to use your FSA to pay for certain types of child care.

It’s Easy to Use

Once you’ve signed up for an FSA, the money will be automatically deducted from your paycheck and deposited into your account. Then, when you have a qualifying expense, you can simply use your FSA debit card or submit a claim form to get reimbursed.

You Don’t Have to Worry about Use-It-Or-Lose-It

Unlike some other types of benefits plans, with an FSA, you don’t have to worry about forfeiting any unused funds at the end of the year. This is because most FSAs allow you to carry over up to $500 of unused funds into the next year.

It Can Help You Save for Future Expenses

By signing up for an FSA, you can start setting aside money now to cover future medical and dental expenses. This can be especially helpful if you know you’ll be facing a large bill in the near future, such as for orthodontic work or major surgery.

5 Cons Of Flexible Spending Accounts

There is a Limit on How Much You Can Contribute

While the amount you can contribute to an FSA varies by employer, the maximum contribution limit for 2019 is $2,700. This means that if you have high medical expenses, you may not be able to fully cover them with your FSA.

You Have to Use It Within a Certain Time Frame

Most FSAs have a “use-it-or-lose-it” policy, which means that the money you contribute must be used within a certain time frame or you will forfeit it. For example, if you sign up for an FSA in 2019, you will need to use the funds by December 31, 2019.

There are Some Restrictions on What You Can Use It For

While FSAs can be used for a wide range of medical and dental expenses, there are some restrictions. For example, you cannot use your FSA to pay for insurance premiums or long-term care costs.

You May Have to Pay Taxes on withdrawals

If you withdraw money from your FSA for non-qualified expenses, you will be required to pay taxes on the amount withdrawn as well as a 10% penalty.

You Could Owe Money if You Leave Your Job

If you leave your job, you may be required to repay any funds that you have not yet used from your FSA. This is because FSAs are typically employer-sponsored plans.


As you can see, there are both pros and cons to having a Flexible Spending Account. Ultimately, whether or not an FSA is right for you will depend on your individual circumstances. If you think an FSA could be helpful for you, talk to your employer to see if they offer this type of benefit.