Each year, you can contribute up to the IRS limit of $3,050 to a Health FSA for qualifying health expenses. These contributions are taken out of your paycheck before taxes, which can reduce your taxable income and save you money on taxes, depending on your financial situation.
The Health FSA operates on a use-it-or-lose-it basis, meaning that you can carry over a certain amount of unused funds into the next year. However, any money over the carryover amount will be forfeited if it is not spent on eligible expenses by the end of the year and claimed by the deadline.
For the year 2024, the carryover amount allowed is $640, and the deadline to submit claims for reimbursement is April 15, 2025. By taking advantage of the FSA, you can manage your healthcare expenses smartly and potentially save money on taxes at the same time.