Flexible Spending Accounts (FSAs)
Flexible Spending Accounts (FSAs) allow you to pay for eligible expenses using tax-free dollars. Important: There is a “use it or lose it” rule imposed by the IRS.
Grace Period: Stack AV allows employees a grace period of 75 days after the plan year ends to incur and file claims for Health Care FSA and Dependent Care FSA (3/15/2027).
Run Out Period: You have 90 days after the plan year ends to file claims. For the 2026 plan year, this means you have until March 31, 2027, to submit claims.
How Much Could You Save?
Here’s an example. Let’s say Tom decides to set aside $2,000 in an FSA for the year. Normally, on that money, he’d pay $560 in federal income tax, $100 in state income tax, and $153 in FICA tax. So, by contributing that $2,000 to his FSA, he’ll get an $813 tax savings for the year.
Healthcare FSA
Contribute up to $3,400 per year, pretax, to pay for copays, prescription expenses, lab exams and tests, contact lenses and eyeglasses.
Dependent Care FSA
Contribute up to $7,500 per year ($3,750 if married and filing separate tax returns), pretax, to pay for daycare expenses associated with caring for elder or child dependents that are necessary for you or your spouse to work or attend school full-time. You cannot use your Healthcare FSA to pay for Dependent Care expenses.
Without an FSA, Tom Would Pay
- 28% in federal income tax: $560 savings
- 5% in state income tax: $100 savings
- 7.65% in Federal Insurance Contributions Act (FICA) tax: $153 savings
His total tax savings for the year with an FSA: $813
By using an FSA, Tom reduces his taxable income—and saves $813 for the year.