A Flexible Spending Account (FSA) is like a personal savings account set aside specifically to pay eligible expenses for you and your family. You set up an FSA through your employer. The two main types of FSAs are:

• A health care FSA, for eligible medical, dental, vision and hearing expenses
  
  
• A dependent care FSA, for eligible expenses to care for a dependent child or a dependent adult who is incapable of self-care
  

When you contribute to an FSA, the money is deposited into your account throughout the year by payroll deduction. The money you deposit is deducted from your salary before it is taxed, immediately reducing your taxable income. You then file claims to be reimbursed from your account tax-free for eligible care expenses.

Health care FSA sponsors can now choose to have their plans reimburse for over-the-counter (OTC) drugs used for "medical care" as defined by the IRS. Each plan sponsor decides whether to take on the administrative work to cover OTC drugs such as antacids, allergy medications, pain relievers and cold medicines. FSAs cannot reimburse expenses for dietary supplements that are merely beneficial, items for cosmetic use, or items not used for medical care.

For a free FSA kit that employers can use to help set up these accounts, to communicate the plans and to enroll employees, please call MMBB at 800-222-3872, extension 2336.

To help decide how much to set aside into an FSA, try our:

• Health Care FSA Modeler
  
• Dependent Care FSA Modeler