So if you are expecting an increase or decrease in medical bills you can plan ahead and make a change to your contribution. Generally, you can change the contribution amount to you FSA account once a year. Any state tax savings would make this an even better deal. If your tax rate is 25%, you would save more than $1,600. It also avoids the 7.65% Social Security and Medicare tax. To illustrate the savings, if you set aside $5,000 in an FSA, it avoids being taxed as income.
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