In 2024, the maximum contribution limit for the Health FSA is $3,050. This means that individuals can save money on taxes by deducting their contributions from their paycheck before taxes are withheld. This reduction in taxable income can lead to significant tax savings, depending on an individual’s individual situation.
However, it’s important to note that the Health FSA is a use-it-or-lose-it plan. While participants are allowed to carry over a certain amount each year, any unused funds will be lost if not spent on eligible expenses by the end of the year and claimed by the deadline. For 2024, the carryover amount is set at $640 and the deadline to submit claims is April 15, 2025.
To maximize the benefits of this contribution method, individuals should carefully monitor their expenses and make sure to use all allocated funds within the deadlines. By doing so, they can take advantage of the tax savings offered by the Health FSA and ensure that they receive maximum value from their contributions.