If you’ve researched health plans recently, you know there are many tax-advantaged savings accounts that can help you pay for qualified expenses. They all have different benefits, rules and requirements, different acronyms and different use-cases, so it’s understandable if you’re having a hard time keeping everything straight. In this post, we’re debunking the top 10 FSA myths to help you in your navigation efforts. The myths we’re covering are:

1. I don’t go to the doctor often enough for an FSA

2. I can’t use FSA for over the counter medication

3. I can still use my FSA card even if there’s no balance

4. I can remove money From My FSA at an ATM

5. My employer will spend my unused FSA balance for anything they want

6. HSA and FSA are the same

7. FSA balances never roll over

8. You need to save all your receipts

9. I probably can’t afford an FSA

10. I can keep my FSA if I leave my employer

Myth 1: I don’t go to the doctor often enough for an FSA

It’s true, using your FSA contributions to pay for copays and coinsurance for medical care is a common reason people maintain this type of account. But it’s not the only use-case for an FSA. You can use your FSA contributions to pay for prescriptions like birth control, insulin, and blood pressure medication, as well as everyday supplies like sunscreen and band-aids, and medicine cabinet essentials like Children’s Motrin, thermometers, and decongestant drops. You can even buy menstrual care products, prenatal vitamins, and breast pumps with your FSA.

You can also use your FSA to pay for expenses for you, your spouse, and any dependents you have. So even if you’re only going to the doctor for your annual physical and maybe once or twice a year for an illness-related appointment, chances are you’re using many products in the course of your everyday life that qualify as an approved FSA expense. Curious about what exactly qualifies as an approved FSA expense? Check out our searchable list of eligible expenses, and this IRS publication.

Myth 2: I need a prescription to use my FSA for over the counter medication

This myth used to be true. But the CARES Act removed the need for a physician’s prescription in order to use FSA money for over the counter medication. The type of over-the-counter medications you can use your FSA for without a prescription include:

• Children’s Mortin and Tylenol

• Adult Tylenol and Ibuprofen

• Cold and Allergy relief

• Digestive relief like Alka Seltzer and Imodium

• Healing ointments like those used to treat eczema

For a complete list visit search our list of qualified FSA expenses.

Myth 3: I can still use my FSA card if there’s no balance

This myth likely stems from the way FSAs function. During open enrollment you decide how much you want to contribute to your FSA for the year and that total amount is available to you at the beginning of your plan year. Your employer will still subtract the appropriate amount from each paycheck, but your account will be fully funded on day one, regardless of how many payments you’ve made.

However, you only have this amount available to you. So if you spend your entire annual allotment in January, and your account says you have a balance of $0, you won’t have any more FSA money available to you even though your employer is still withdrawing your contributions from your paychecks.

Myth 4: I can remove money from my FSA at an ATM

Your FSA company might provide you with a debit card linked to your account and if they do, that’s great! It means you can pay for your FSA-qualified purchases at the point of sale. But it doesn’t mean you can withdraw cash from your account. If you do pay for an expense with your personal account, you will have to submit the appropriate documentation to your FSA company so they can approve and issue a reimbursement.

Myth 5: My employer will spend my unused FSA balance for whatever they want

If you have a balance remaining in your FSA account at the end of your plan year, your employer has the choice to offer one of the following remedies:

1. A grace period in which to use your contributions (the IRS allows up to 2 ½ months).

2. The ability to roll over up to $550 of unused funds to the following plan year.

Regardless of what they offer, if you have a balance remaining in your FSA that you can’t use, your employer can’t just use it to buy printer paper. The IRS actually has pretty strict rules about the use of forfeited FSA contributions: they must be used for the benefit of plan participants. So employers can use them for plan administrative costs or they can distribute unused contributions evenly into employees’ FSA accounts the following year.

Myth 6: HSAs and FSAs are the same

While Health Savings Accounts (HSAs) and healthcare FSAs have similar functions: to offer a tax-free way to pay for qualified medical expenses, the way they function is different and they have different eligibility requirements.

HSAs are owned by the individual so you never lose access to your account. There is no “use it or lose it” rule so your HSA balance rolls over from year to year giving you a vehicle to save for the long term, be it future health costs or retirement. In order to contribute to an HSA you must be currently enrolled in a High-Deductible Health Plan (HDHP). But you can always use the contributions you’ve made previously, regardless of the type of health plan you have.

Conversely, FSAs are owned by your employer so you only have access to your account for as long as you’re employed with that company. But if you leave the company, you might be able to maintain access to your FSA through COBRA. FSAs do have a “use it or lose it” rule, meaning you could forfeit whatever balance remains at the end of the plan year unless your employer allows for a rollover of funds or offers a grace period in which to use your money. Health FSAs are compatible with any type of health plan, giving you flexibility in terms of insurance coverage.

They also have different annual contribution limits. The current contribution limits can be found here:

• HSA contribution limits

• FSA contribution limits

Myth 7: FSA balances never roll over

As we said above, there are instances when your FSA balance can roll over. The IRS allows your employer to offer one (not both) of the following remedies for end-of-year unused balances:

• The ability for employees to roll over up to $550 of unused contributions to the following plan year, or

• A 2 ½ month grace period in which to use any unused contributions.

If your employer allows you to roll over your unused funds, it won’t affect your contribution limit for the following year. If you end up forfeiting any money at the end of your plan year, don’t worry, your employer has to use that money for your benefit. That could mean covering plan administrative costs or putting a little extra money in employees’ accounts during the following plan year.

Myth 8: You need to save all of your receipts

Most FSA providers will issue you a debit card so you can pay for your expenses at the point purchase. That means no receipts are necessary because you’re not submitting anything for reimbursement. However, keeping your receipts is always a good idea, especially if the IRS asks you to substantiate your purchase. In addition, if you do end up paying for a qualified expense with your personal card, save that receipt because your FSA administrator might require it to issue a reimbursement.

Myth 9: I probably can’t afford an FSA

At first, the idea of allocating money away from your take-home pay might not seem doable. But keep in mind, this money isn’t subject to income taxes. So whatever you spend this money on (and as we said before, there’s quite a lot that qualifies as an FSA-approved expense), you could save up to 37% on that expense, depending on your tax bracket. If you were going to make these purchases anyways, it would make sense to do it with tax-free money.

Myth 10: I can keep my FSA if I leave my employer

Unfortunately, in most cases, this isn’t true. Your employer owns your FSA so when you leave, you forfeit any unused balance. You might be able to maintain access to your FSA through COBRA so if you are planning to leave your company, contact your HR Department to ask about this possibility.

FSAs are a great tool you can use to save money tax-free for qualified health-related purchases. They do come with rules and restrictions so make sure you understand how they function so you can use these accounts to their full potential. If you have questions about how your specific FSA functions, reach out to your HR Department or FSA administrator.