A healthcare FSA, or flexible spending account, is an arrangement through your employer that allows you to pay for many out-of-pocket medical expenses with tax-free dollars. You decide how much to put in an FSA, up to a limit set by your employer, and you arent taxed on this money. The funds in an FSA can be used to pay for qualified medical expenses, such as insurance copayments, deductibles, qualified prescription drugs, insulin, and medical devices. You can also use FSA funds to cover costs of medical equipment like crutches, supplies like bandages, and diagnostic devices like blood sugar test kits.

To enroll in an FSA, you usually sign up once a year during open enrollment. You estimate your expenses for the upcoming year, see if your employer is contributing any money to the FSA, and decide on the total amount you want to put in the account. A portion of that amount is then taken out of your paycheck before taxes throughout the year and put in your FSA. If money is left at the end of the year, the employer can offer one of two options: you get 2.5 more months to spend the leftover money, or you can carry over up to $500 to spend the next plan year.

Its important to note that FSA funds are a "use it or lose it" account, meaning that if you dont use the funds by the end of the year, your employer can keep the funds you havent used. However, some employers may offer a grace period or a carryover option.

In summary, a healthcare FSA is a tax-advantaged savings account offered through your employer that allows you to pay for qualified medical expenses with tax-free dollars. It can be a useful tool to help make out-of-pocket healthcare expenses more manageable.