A flexible spending account allows you to set aside a portion of your pretax dollars to cover medical expenses. Each year you have the opportunity to determine how much you will have withheld. This amount is then equally divided between your paychecks and you will pay into the system throughout the year. At the end of the year you will lose the money that you do not spend.
A flexible spending account works as a reimbursement plan. This means that you will need to take your receipt to your human resources office and fill out a form to receive the money back in the mail. This often can be accomplished through interoffice mail or email as well. Once they have received the form they will process it and you will receive a check for the amount of money you spent.
The money you have decided to set aside is immediately available to you at the beginning of the year. You need to plan carefully, because if you switch jobs, they will withhold from your last paycheck the amount that you owe the system if you have already used up the amount you put aside for the year. If you know you will be switching companies within the year, you may estimate your amount lower than normal to protect yourself.
You will not receive a refund of the unused portions, nor will it rollover into the next year. You need to use the money by the end of the year, or else you will lose it. You can talk to your human resources department to request a list of acceptable items to submit for reimbursement. This can include glasses, co-payments, over the counter medication and many other items. It is important to follow the list.
