One of the biggest advantages of enrolling in Consumer-Directed Benefits (CDBs), such as a Flexible Spending Accounts (FSAs) or a Health Savings Account (HSA), is that you can save money. By using pre-tax dollars to cover eligible expenses, you reduce the amount you pay in taxes and take home more of your hard-earned paycheck.
You decide which Consumer-Directed Benefits to enroll in and how much to contribute (check your employer’s plan details for the minimum and maximum amount). Simply use our online calculators to help determine an election amount that’s right for you and see just how much you can save.
Money is automatically withdrawn from your paycheck and deposited into your account before taxes are deducted. When available, use the money in your account to pay for eligible expenses throughout the coverage period. For a Healthcare FSA, the total amount you elect is available on day one, providing an ideal way to pay for big-ticket items like eye surgery or orthodontia.
Your dedicated account can be used to cover a wide variety of qualifying expenses, and the type of account you have determines which expenses are eligible. For example, an HSA or Healthcare FSA covers medical, dental, and vision expenses, while a Dependent Care FSA is used to pay for child and adult daycare expenses. Funds in a Commuter Account pay for transit (bus, subway, train, ferry or vanpool) and parking expenses when commuting to and from work.
You save by reducing the amount of your earnings that are subject to federal income tax, FICA (Social Security) tax, and where applicable, state income tax. Exactly how much you save depends on how much you contribute each year and on your tax situation. Most people can save between $30 and $40 in taxes for every $100 contributed.
The bottom line: You keep more of your hard-earned money—instead of giving a portion to the IRS—by using tax-free dollars for expenses you face throughout the year. And with the various mobile and online resources available, spending your account funds couldn’t be any easier.