Now is a great time to begin planning to take full advantage of your employer?s flexible spending arrangement (FSA) during 2016.
FSAs provide employees a way to use tax-free dollars to pay medical expenses not covered by other health plans. Because eligible employees need to decide how much to contribute through payroll deductions before the plan year begins, many employers are offering right now to their employees the option to participate during the 2016 plan year.
Interested employees wishing to contribute during the new year must make this choice again for 2016, even if they contributed in 2015. Self-employed individuals are not eligible.
An employee who chooses to participate can contribute up to $2,550 during the 2016 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, the employer may also contribute to an employee?s FSA.
Employers are not required to offer FSAs so you should check with your employer or human resources department to see if it is offered.