Home > Credit Score > FSA Card: What You Need to Know About This Financial Tool and Its Impact on Your Credit

Comments 0 Comments

An FSA card is the debit card that allows you to access money in your flexible spending account. This is an account that is set up alongside your health insurance, and you can choose to have pretax dollars from your paycheck routed into it. Those funds can then be used to pay for certain qualifying medical expenses.

What Are the Benefits of an FSA?

The biggest benefit of a flexible spending account (FSA) is that it can reduce how much you pay in taxes. You don’t pay taxes on the money that is deposited into this account out of your paycheck. If you know you’ll spend all of the money on qualifying expenses within the time period required, you can cover medical costs you’d already have to pay for while lowering your tax burden.

Some people also like FSAs because they lighten the burden of health care costs throughout the year. If you put money from every paycheck into the FSA savings account, then it may be easier for you to pay for prescriptions, copays and deductibles later.

How Does a FSA Debit Card Work?

Flexible spending account options may be offered alongside your employer-sponsored health plans. They are also sometimes an option when you purchase insurance in the health care marketplace. However, you must choose to enroll in the FSA plan—it’s not an automatic part of your coverage, even when it’s available.

Once you enroll, you can decide how much of your pretax income you would like to contribute to the account. The IRS limits you to contributing $2,650 per year to this account. Someone who is married can contribute up to the same amount into their spouse’s FSA.

Once you fund your FSA, you can use the account to pay for eligible medical expenses or buy eligible qualifying products. One way of doing so is by using your FSA card just as you would use any debit or credit card at check out.

Remember to only use your FSA on eligible expenses, and keep your receipts and another backup. If you’re ever audited, the IRS may ask you to prove that you used your FSA money for approved spending.

What Items Are Eligible for FSA?

FSA funds are typically used to cover medical and health-related expenses. Some things you can use your FSA to cover include:

  • Payments to doctors, hospitals and other health care providers that are part of your copay or deductible
  • Any medication that is backed by a doctor’s prescription, including over-the-counter meds
  • Insulin, even without a prescription
  • Necessary medical equipment such as crutches or walkers
  • Diagnostic devices such as glucose monitors or blood pressure cuffs
  • Supplies such as bandages
  • Vision care, including eyeglasses or contact lenses

Can I Use My FSA Card Online?

Yes, you can use your FSA card for online spending, as long as it’s one of the eligible expenses listed above. That might include making a payment on a bill to your doctor’s office via an online portal or buying prescribed medical supplies via an online vendor.

Can I Get Cash Off My FSA Card?

In rare cases when you need to pay for qualifying expenses but the provider or store doesn’t take your FSA card, you can use your card to withdraw cash to make the payment. However, you must keep all the documentation proving that the amount you withdrew was used for eligible expenses. If you’re ever questioned by the FSA provider or the IRS about the withdrawal and you don’t have the supporting documentation, you may be required to payback those funds.

Are There Any Downsides to an FSA Card and Account?

The biggest disadvantage of an FSA account is that the funds are use-it-or-lose-it—even though it’s your money. FSA providers let you know what the deadline is for using all of your contributions from the year. They typically range from January through March of the following year.

Because you can’t simply withdraw the unused funds or spend them on something else instead, make sure that you estimate your medical expenses using as much information as you can. And when in doubt, estimate slightly lower so you aren’t left with a loss at the end of each year.

Is an FSA the Same Thing as an HSA?

An FSA and a health savings account (HSA) are slightly different. HSAs are only available to individuals with high deductible plans. Because of this, the contribution limits are higher. HSA balances also roll over to be used for the next year, unlike FSA balances.

Does Your FSA Card Impact Your Credit?

“While FSA cards look and behave like credit or debit cards where they’re accepted,” says credit scoring expert Barry Paperno, “like debit cards, they don’t appear on your credit report or get included in your credit scores. That’s primarily because they’re not truly credit accounts where a lender is making a loan to you. Rather, the FSA consists of money you have transferred, or will be transferring, from your paycheck.”

If you’re worried that your FSA might impact your credit score, it might be a sign of general anxiety about what’s on your credit report. Sign up at Credit.com to get access to your credit score and reports for greater peace of mind.

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other sponsored content on Credit.com are Partners with Credit.com. Credit.com receives compensation if our users apply for and ultimately sign up for any financial products or cards offered.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.



Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team