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It pays to help employees understand FSA eligibility to avoid losing funds at deadline

HR teams can play an important role in this process by promoting resources like a comprehensive FSA eligibility list.

By Rachel Rouleau | December 06, 2024 at 11:19 AM
An FSA plan can be offered alongside any medical or dental plan. However, it’s important to note that employees can only enroll in a limited-purpose FSA if they also contribute to an HSA according to IRS regulations.

A flexible spending account (FSA) is a valuable resource that millions of individuals and families rely on to pay for qualified out-of-pocket medical expenses, and it seems much of the retail world has caught on and agrees. As a result, “FSA eligible” is a hot, new tagline for retailers, especially as December 31 approaches.

While flexibility and choice for consumers is something we can all agree is a good thing, one key factor that isn’t widely recognized or promoted is that FSAs can only be used for qualified medical expenses as defined by the Internal Revenue Service (IRS) and IRS Code Section 213(d). The fact of the matter is that compliance matters a great deal with these tax-advantaged accounts, and to ensure a seamless shopping experience at the end of the year, it pays to educate employees about what is and is not eligible.

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