How FSAs Work

FSAs can help bridge the gap left by other health insurance plans. They allow employees to use tax-free funds to cover out-of-pocket health care expenses, and they sometimes replace a traditional employer health insurance plan.

Employees can also use their FSA to supplement a marketplace plan. In other cases, the FSA may supplement an employer-sponsored health care plan. Either way, the FSA has one central purpose: to cover out-of-pocket expenses.

Employees contribute a limited amount of money to their FSA each year. These funds are taken out of the paycheck before taxable income is calculated. Afterward, employees have one year to use their funds on approved health care expenses. FSA funds can apply toward deductibles, copayments, and coinsurance. Some prescription drugs and over-the-counter medications are covered. Employees can even pay for medical devices like crutches using their FSA.

“FSA can help bridge the gap left by other health insurance plans.”

The Pros and Cons of an FSA

Tax savings represent the main benefit of an FSA. Since the funds are removed before taxes, employees have a lower taxable income. Some employees find that an FSA increases their take-home pay. The funds in an FSA are available at all times, with few restrictions. Most FSAs are linked to a debit card for added convenience. Patients can then use their FSA debit card at their doctor, dentist, or pharmacy. Patients usually do not need pre-approval or to do other paperwork.

However, employees can only contribute a certain amount of money each year. For most employees, the limit is $2,750 per year. Spouses can also contribute an equal amount to their own FSA. Additionally, FSA funds are tied to an employer. If an employee changes jobs, they cannot keep their current FSA

FSAs funds are "use it or lose it." At the end of the year, employees can roll over up to $500. The remaining unused funds are forfeited to the employer. Employees must keep an eye on their FSA balance. It's up to each patient to ensure that they use their funds before they expire.

Many patients confuse FSAs with health savings accounts (HSAs). These programs are similar, but they have a few key differences. With an FSA, employees can use their funds as a line of credit. With HSAs, employees can only spend money they have already saved. HSAs are also transferrable: employees can keep their HSAs if they change jobs.

“The funds in an FSA are available at all times, with few restrictions.”

Saving Money With an FSA

An FSA allows employees to set aside a certain amount of money from each paycheck. At most workplaces, enrollment in an FSA is available for only a limited amount of time. Employees should consult their employers for the full details on how to sign up for an FSA. It is also important to determine how much money they plan to save during the enrollment period.

Underestimating how much money one should save may cause one to miss out on tax savings, while overestimating may cause one to lose money. As such, each individual must consider their unique circumstances. Once they have enrolled, the set amount of money will be deducted from each paycheck. Funds expire on March 15 of the following year.

“An FSA allows employees to set aside a certain amount of money from each paycheck.”

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How to Use FSA Funds

Patients can use their FSA to cover most dental expenses, including routine care. But not all procedures and treatments are eligible. Before scheduling a dental procedure, patients should talk to their employer and plan provider. Cosmetic procedures, including cosmetic orthodontics, are usually not covered under an FSA. However, if a patient needs orthodontics for medical purposes, they might be allowed to use their FSA funds. Our dental team can work with your plan provider to determine coverage.

“Cosmetic procedures, including cosmetic orthodontics, are usually not covered under an FSA.”

Questions Answered on This Page

Q. What is an FSA?

Q. What are the benefits of an FSA?

Q. Can I use my FSA to pay for dental care?

Q. Where can I use my FSA funds?

Q. How can I save money with an FSA?

People Also Ask

Q. Is dental insurance worth it?

Q. Who is the billing specialist?

Q. How often should someone have a dental checkup?

Q. Do HSAs cover dental services?

Q. How can someone determine what type of dentist or service they need?

What Treatments and Procedures Are Eligible

FSAs cover a wide range of dental services, including:

• Routine cleanings
• Filling, sealants, and extractions
• Diagnostic and preventive care
• Gum disease treatment
• Oral surgery
• Crowns, bridges, and dentures

Employees can also use their FSA funds for other health care expenses, such as:

• Prescription medications
• Medical and diagnostic devices
• Over-the-counter medications (with a doctor’s prescription)
• Copays
• Deductibles
• Coinsurance
• Eyeglasses
• Eye surgery
• Hearing aids
• Hospital expenses

FSA funds can go toward most preventive and diagnostic procedures, though some exclusions may apply. One's employer and plan provider can provide details about specific rules and exemptions.

“FSA funds can go toward most preventive and diagnostic procedures.”

Frequently Asked Questions

Q. What is the maximum amount I can put in my flexible spending account?

A. While maximum annual contributions may vary, the most you can put into a medical FSA is $2,750. The yearly maximum for a dependent care FSA is $5,000. Ask your employer for more details about your policy.

Q. Do my FSA funds roll over?

A. It depends on your employer. If you have money left in your flexible spending account at the end of the year, your employer may give you 2.5 more months to spend the money. They may also allow you to carry over up to $500 for the next plan year.

Q. What is the difference between a medical FSA and a dependent care FSA?

A. As the names suggest, medical FSAs are reserved for medical expenses only. Dependent care FSAs are reserved for dependent care services. The latter include before or after-school programs, child or adult daycare, preschool, and summer day camp.

Q. What is the difference between an FSA and an HSA?

A. Flexible spending accounts (FSAs) are owned by an employer. Health savings accounts (HSAs) are controlled by an individual. However, both allow employees to save on their medical expenses with pre-tax money.

Q. Are FSAs the same as HRAs?

A. No. Flexible spending accounts (FSAs) are funded by the employee and sometimes by the employer. In contrast, HRAs are funded only by the employer. However, patients can have both accounts at once.

Quality Dental Services Can Transform Your Smile

By visiting us as soon as possible, our team can help get you the professional treatment you need. Instead of waiting around and allowing the symptoms to get worse, we can provide you with treatment options.

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Dental Terminology

Coinsurance

Coinsurance is the percentage one pays for a health care service after their deductible has been met.

Co-pay

A fixed payment made by the insured (patient) coupled with that of the insurance coverage.

Deductible

Part of an insurance policy that indicates a specified amount of money that the insured must pay prior to the coverage amount.

Diagnostic Procedure

A diagnostic procedure is a medical procedure aimed at diagnosing a condition or illness.

Employer Sponsored Health Insurance

Employer sponsored health insurance is a healthcare plan offered to eligible employees in which the employer pays a portion of the monthly premium.

Health Care Savings Accounts

A tax-advantaged savings account for medical expenses for tax-payers with a high-deductible healthcare plan.

Open Enrollment

The open enrollment period is the time of year when someone can enroll in a health insurance plan.

Out of Pocket Medical Expenses

An out of pocket medical expense is anything a person has to pay for medical reasons that is not covered by insurance. These typically include co-payments, deductibles or uninsured prescription and procedure costs.

Out of Pocket Maximum

The out of pocket maximum is the most an individual will have to pay for health care services in a plan year before your insurance provider covers all the cost.

Call Us Today

An FSA can help you set aside health care funds and save money at tax time. If your health care plan doesn't cover out-of-pocket dental expenses, an FSA might be able to help. But it's your job to make sure that your funds don't expire. If you don't use your FSA funds each year, you may forfeit the money.

Let Desert Dream Dentistry & Spa in Palm Desert help you put your FSA to use. Call us at 760-565-0234 to learn more about applying FSA funds toward dental care.

Helpful Related Links

• American Dental Association (ADA). Glossary of Dental Clinical Terms. 2025
• American Academy of Cosmetic Dentistry® (AACD). Home Page. 2025
• WebMD. WebMD’s Oral Care Guide. 2025

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