Do you have a Flexible Spending Account (FSA) with your employer? Make sure to take full advantage of it in the new year. For 2020, the contribution limit will rise to $2,750 (up from $2,700 in 2019). If an employer chooses, employees can carry over up to $500 of unused funds into 2021.
Otherwise, FSAs have a “use or lose” provision. FSAs provide employees a way to use tax-free dollars to pay medical expenses not covered by other health plans. Amounts contributed aren’t subject to federal income tax, Social Security tax or Medicare tax. If the plan allows, an employer can contribute to an employee’s FSA.
