What Is a Flexible Spending Account Credit Card?

A Flexible Spending Account (FSA) allows individuals to set aside pre-tax money for eligible healthcare costs. This employer-sponsored benefit reduces taxable income as contributions are deducted from paychecks before taxes. The associated FSA card provides a convenient way to access these funds.

Understanding Your Flexible Spending Account Card

The “flexible spending credit card” is actually a debit card directly linked to your Flexible Spending Account. Its function is to pay for eligible health and dependent care expenses. This card operates much like a standard debit card, allowing you to use it at the point of sale at various medical providers, pharmacies, or stores. Funds are drawn directly from your FSA balance, eliminating the need to pay out-of-pocket and then seek reimbursement.

FSAs are employer-provided benefits. The card provides access to pre-tax funds contributed through your workplace, streamlining payment for approved expenses. It is solely for eligible expenses and cannot be used for cash withdrawals.

Permitted Uses and Eligible Expenses

Your FSA card pays for medical, dental, and vision expenses not covered by insurance. Eligible medical expenses include co-pays, deductibles, and prescription medications. Dental care includes exams, cleanings, X-rays, and braces, while vision expenses include eye exams, prescription eyeglasses, contact lenses, and laser eye surgery.

Over-the-counter (OTC) items, including medications, first-aid supplies, and diagnostic products, are also eligible. These expenses must be medically necessary. The FSA administrator may require receipts to verify purchase eligibility, even if the transaction was initially auto-approved.

Important Rules and Considerations

FSAs are governed by the “use-it-or-lose-it” provision, meaning funds not used by the end of the plan year are forfeited. However, employers often offer exceptions. One common exception is a grace period, extending the time to use funds by up to two and a half months after the plan year ends, typically until March 15 for a calendar year plan.

Another exception is the carryover option, allowing a limited amount of unused funds to roll over into the next plan year. For 2025, the maximum carryover amount is $660. Employers can offer either a grace period or a carryover, but not both. The IRS sets annual contribution limits; for 2025, employees can contribute up to $3,300 to a healthcare FSA. The full annual election amount is available on the first day of the plan year, regardless of payroll deductions.

Using and Managing Your FSA Card

Managing your FSA card involves meticulous record-keeping. Retain detailed receipts for all transactions, even those automatically approved, in case your FSA administrator requests verification. This practice helps ensure compliance and prevents issues. If a transaction is declined, common reasons include insufficient funds or the merchant not being recognized as an eligible healthcare provider.

In such cases, you may need to pay out-of-pocket and then submit a manual claim for reimbursement to your FSA administrator, providing the necessary documentation. This involves submitting receipts and a claim form, typically through an online portal or by mail. For specific details regarding your plan, including eligible expenses, deadlines, and claim procedures, consult your plan administrator’s website or your employer’s human resources department.