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ARTICLE 1
Why an FSA?
2026 Contribution Limit
You can contribute up to
$3,400
to a health FSA in 2026.
View plan rules
What is a Health FSA?
The Potential Tax Advantage
Your Decision Matters
When Your Money is Available
The Tradeoff: Unused Funds Matter
Key FSA Terms
Before You Make a Decision
Official Resourcesn
FSA Basics: How a Health FSA Works
Updated for the 2026 plan year
What is a Health FSA?
A health Flexible Spending Arrangement, usually called a health FSA, is an employer-established benefit that allows you to set aside money from your pay to reimburse eligible healthcare expenses.
You generally choose your contribution before or at the beginning of your plan year. Your employer then deducts portions of that election from your pay over the course of the year. Because qualifying salary-reduction contributions generally aren't subject to federal income or employment taxes, an FSA can reduce the after-tax cost of healthcare expenses you were going to incur anyway. Eligible reimbursements generally are tax-free.
The basic idea
Suppose you expect to spend money during the coming year on prescriptions, dental work, copayments, vision care, or other eligible expenses.
Without an FSA, you generally pay those expenses with money remaining after applicable taxes.
With an FSA, you can elect to have part of your compensation directed to the FSA before applicable federal income and employment taxes are deducted, then use those funds to reimburse qualifying expenses.
That creates the FSA's principal financial advantage: eligible healthcare expenses can effectively be paid with pre-tax dollars.
Your actual savings depend on your circumstances, including your income, applicable tax rates, contribution amount, and eligible expenses.
Your decision/election matters
An FSA is different from an ordinary savings account.
At the beginning of the plan year, you generally decide how much you want to contribute for the year. Your employer deducts that amount incrementally from your pay. Changes during the plan year generally are permitted only when allowed under applicable rules and your employer's plan.
For plan years beginning in 2026, the federal employee salary-reduction limit for a health FSA is $3,400. Your employer's plan may impose additional rules relevant to your election.
An unusual advantage: your annual decision/election may be available before you've contributed it all
A health FSA generally must make your full annual elected amount available for reimbursement during the coverage period, even though your salary reductions occur throughout the year.
For example, if you elect $2,400 and incur a qualifying $2,000 expense early in the plan year, the fact that only a portion of the $2,400 has yet been deducted from your pay does not ordinarily limit reimbursement to the amount already withheld.
That is an important distinction between an FSA and a conventional savings account.
The tradeoff
The tax advantage comes with a constraint: you need to make your contribution decision before you know exactly what the year will bring.
Health FSAs generally operate under a forfeiture rule for unused funds, although an employer's plan may provide either a permitted carryover or a grace period. Your employer cannot simply refund an unused balance to you.
That means the goal usually isn't:
Contribute as much as possible.
It is closer to:
Choose an amount that makes sense given the eligible expenses you reasonably expect and the uncertainty that remains.
That is the decision Calcumetic is designed to help you make.
FSA terms worth knowing
Election: The amount you choose to contribute for the plan year.
Eligible expense: An expense your FSA can reimburse under applicable federal rules and your particular plan.
Plan year: The period governed by your employer's FSA plan. It is not necessarily something you should assume without checking your plan materials.
Carryover: If your employer's plan permits it, a limited amount of unused FSA funds that can carry into the following plan year.
Grace period: If your plan provides one, an additional period—generally up to 2½ months—during which qualifying expenses may be incurred using eligible funds remaining from the preceding plan year. A health FSA generally cannot offer both the carryover and grace-period features for the same plan year.
Reimbursement: Payment from the FSA for a qualifying expense you incurred.
Before you make an election
Know three things:
What you reasonably expect to spend.
Think about known appointments, prescriptions, dental work, vision needs, recurring expenses, and other anticipated eligible costs.
What remains uncertain.
Healthcare spending changes. Some expected expenses never occur; unexpected ones do.
What your employer's plan actually allows.
Contribution rules, carryover provisions, grace periods, deadlines, and administrative requirements can differ by plan.
Your FSA election is therefore not simply a tax decision. It is a decision about expected healthcare spending under uncertainty.
That distinction matters.
Set aside pre-tax dollars
Pay for eligible healthcare expenses
Lower your taxable income
Get reimbursed tax-free for qualifying expenses
Did you know?
For 2026, plans that allow a carryover can let you carry over up to $680 of unused funds into the next plan year.
Next up
Learn which expenses can generally qualify for FSA reimbursement
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