Quick Answer: An FSA is an employer-provided benefit that lets you set aside pre-tax money from your paycheck to pay for medical expenses. Unlike an HSA, FSA funds generally must be used within the plan year ("use it or lose it"), and the account is tied to your employer.
The Simple Explanation
An FSA is like a savings jar at work specifically for health expenses. Before your paycheck gets taxed, some of that money goes into your FSA. You then use those pre-tax dollars to pay for eligible medical expenses throughout the year - saving roughly 30% compared to paying with after-tax money.
The catch? You typically need to spend it within the year or risk losing the unspent money.
How Does It Work?
During open enrollment, you decide how much to contribute for the year (up to the annual limit)
Your employer deducts it from each paycheck before taxes
Your full annual amount is available on Day 1 - Even if you've only had one paycheck deducted
You use it for qualified medical expenses throughout the year
At the end of the plan year, unspent funds are generally forfeited (with some exceptions)
2026 FSA Limits
Amount | |
Maximum contribution | $3,400 |
Maximum carryover (if your employer allows) | $680 |
Grace period (if your employer offers) | Up to 2.5 months after plan year |
Important: Your employer decides whether to offer a grace period OR a carryover — not both. Check with your benefits admin.
The "Use It or Lose It" Rule
This is the most important thing to know about FSAs. Unlike HSAs, money left in your FSA at the end of the plan year can be forfeited.
There are two possible safety nets (your employer picks one, or neither):
Grace period - An extra 2.5 months to spend remaining funds from the previous year
Carryover - Up to $680 (2026) rolls into the next year
Many people lose money because they don't spend their FSA before the deadline. That's one reason Crates Health is so valuable - wellness products like gym memberships and supplements are great ways to use your FSA funds on things that actually improve your health.
Key Dates to Remember
December 31 - Most FSA plan years end (check with your employer)
March 15 - Grace period deadline (if your employer offers one)
October-December - Open enrollment, when you choose your FSA contribution for next year
FSA vs. HSA: Quick Comparison
Feature | FSA | HSA |
Requires specific health plan? | No | Yes (HDHP) |
Funds roll over? | Limited (or not at all) | Yes, indefinitely |
Portable between jobs? | No | Yes |
Can invest funds? | No | Yes |
Full amount available Day 1? | Yes | Only what you've deposited |
2026 contribution limit | $3,400 | $4,400 (individual) |
Types of FSAs
Health Care FSA (HCFSA) - Covers medical, dental, and vision expenses
Limited Purpose FSA (LPFSA) - Only for dental and vision; can be paired with an HSA
Dependent Care FSA (DCFSA) - For childcare/eldercare; different rules entirely
How Does This Relate to Crates Health?
Your FSA can be used to pay for wellness products that are eligible medical expenses - including gym memberships, fitness trackers, supplements, and more - when you have a Letter of Medical Necessity.
Don't let your FSA funds go to waste! If you're approaching the end of your plan year with money left over, Crates can help you spend it on wellness products you actually want.
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