A flexible spending account, or FSA, is a tax-advantaged account where contributions are made with tax-free dollars and these funds may be used for an insurance plan’s out-of-pocket medical expenses. Qualified expenses include various forms of cost sharing (e.g. deductibles, copayments). Health insurance premiums, in contrast, are not a form of cost sharing and, as such, are not eligible to be paid for using FSA funds.
A health plan enrollee with an FSA submits a medical expense claim through his or her employer. Assuming the medical expense is eligible and approved, the expense will be reimbursed to the enrollee from funds within his or her personal FSA account.
The Internal Revenue Service (IRS), in their publication number #969, lists the services and products that count as FSA-allowable medical expenses.
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