A Flexible Spending Account (FSA) allows individuals to set aside pre-tax funds for eligible healthcare or dependent care expenses. When employment terminates, understanding the implications for the remaining FSA balance is crucial. Generally, access to the FSA ends upon termination of employment. Funds remaining in the account may be subject to forfeiture, depending on the specific plan rules and any applicable continuation options.
The availability of these accounts represents a significant benefit for employees, enabling them to manage predictable expenses more effectively. Historically, FSAs have evolved as a key component of employer-sponsored benefits packages, allowing for tax advantages and encouraging proactive healthcare planning. However, proper planning is essential to maximize the benefits, especially considering the use-it-or-lose-it nature of many plans and the potential impact of employment changes.