A Flexible Spending Account (FSA) is a tax-advantaged financial account that allows employees to set aside pre-tax dollars for eligible medical expenses. Established under Section 125 of the Internal Revenue Code, FSAs are designed to help individuals manage their healthcare costs while reducing their taxable income. Contributions to an FSA are deducted from an employee's paycheck before taxes are applied, which can lead to significant savings. According to the IRS, the maximum contribution limit for an FSA in 2023 is $3,050 per year.

When it comes to purchasing items with an FSA, the process is relatively straightforward. Employees can use their FSA debit card to pay for eligible medical expenses directly at the point of sale. Alternatively, individuals may need to submit a claim for reimbursement if they pay out-of-pocket. It is essential to keep receipts and documentation of purchases, as these may be required for reimbursement or in the event of an audit. Eligible expenses typically include a wide range of healthcare products and services, such as prescription medications, over-the-counter drugs, and certain medical devices.

Eligibility for FSA cards generally extends to employees who participate in an employer-sponsored health plan. Employers may offer FSAs as part of their benefits package, and participation is typically voluntary. However, not all employers provide this option, and eligibility can vary based on the specific plan. Additionally, family members of the employee may also be eligible for reimbursement of qualified expenses incurred by them, provided they are dependents as defined by the IRS.