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So, when we talk about flexible spending accounts, it’s part of the Section 125 Plan IRS rules. Basically, an employee can establish an account, like a checking account, where they can set aside dollars pre tax for medical care up to $3,200 per year and for dependent care expenses. So, if you have a child in daycare, for example, up to $5,000 a year for a family.

You take that money and you set it aside into an account, pre tax, so you’re reducing your tax liability from your salary, and you’re going to use that money to pay for your medical expenses and your dependent care expenses. What’s important to consider is there’s a use it or lose it rule on flexible spending accounts.

So let’s say you put together, put aside $1,500 next year because you know you’re going to have two crowns done and insurance is going to only pay 50%, so you’ve got to come up with the rest of the money. And then you decide not to have the crowns done. If you don’t spend that $1,500, then you will lose it.

So when you do set aside money in a flexible spending account, make sure you’ve got a planned expense coming up to use the money for.