The Flexible spending account, offers employees the opportunity to put aside some of their earnings into a dependant care or healthcare expenses. 

What is the disadvantage of a flexible spending account?

The major disadvantage is the “use it or lose it” requirement. Use-it-or-lose-it refers to an IRS requirement that if you do not spend all the money you have elected into your account, that money remaining in an FSA after March 15 of the following year will be forfeited because it cannot be rolled over or refunded to the employee.

What does it cover?

An arrangement through the employer, allows employees to pay for many out-of-pocket medical expenses with tax-free dollars. Allowed expenses include the following:

• insurance copayments and deductibles
• qualified prescription medicine
• medical devices.