Flex dollars can be used for co-pays, glasses, contact lenses, medical testing and prescription medication. It can be a great way to set aside money for medical expenses which incur throughout the year.
FSAs are typically set up during open enrollment and you are able to choose the total amount of flex dollars to go into the account. There is a cap on the amount of pre-tax dollars that can be contributed to your FSA. The Flexible Spending Account is active and ready to use when your health care coverage renews, usually January 1st of the following year.
In previous years, if you failed to use your flex dollars by December 31st, you lost that money. The IRS has recently changed their regulations to allow a portion of the FSA dollars to roll over to the following year. Each employer is given the option to either allow their employees to roll some of their flex dollars to the next year, or not.
As you can see, Flexible Spending Accounts are becoming increasingly complicated. However, a FSA can be beneficial, just like insurance benefits. Because flex accounts are different for each company, it is important to contact your human resource office to better understand your Flexible Spending Account.