What is an FSA?

An FSA, or Flexible Spending Account, is indeed characterized by the fact that funds do not roll over at the year's end. Typically, employees contribute to their FSA on a pre-tax basis, which allows them to pay for qualified medical expenses with tax-free dollars within a specific plan year.

The key aspect of an FSA is that any unspent funds at the end of the plan year are generally forfeited, meaning they can’t be carried over into the next year, which is an essential feature employers communicate when offering this benefit.

In contrast to this choice, it's important to emphasize that an FSA is not solely funded by the employer; contributions typically come from both the employer and employee. Additionally, while an FSA does provide tax advantages and can be used for various qualified expenses, the option indicating this is particularly concerned with the rolling over aspect, which is crucial for understanding the mechanics of the account. The options detailing a healthcare plan or a guarantee of full reimbursement do not accurately describe what an FSA is or its functions.