Flexible Spending Accounts (FSAs)
Expenses such as deductibles and copays can quickly add up; and dependent day care or elder care expenses can be even more expensive. Flexible Spending Accounts (FSAs) offer a tax-free way to pay health care and dependent care expenses you would typically pay out-of-pocket. The contributions you set aside are not taxed, so you save money.
Each year you would like to participate in the FSAs, you must elect the amount you want to contribute to either or both of the FSAs. Deductions will come from your paychecks in equal installments throughout the year and are deposited into your account(s). Accounts function separately.
Health Care Flexible Spending Account
Your Health Care FSA election will reimburse you for eligible expenses that you, your spouse, and your dependents incur during the plan year. The entire annual amount you elect can be used at any time during the plan year. When you incur the expense, you can use your debit card or pay out-of-pocket and submit a reimbursement request with documentation to be reimbursed.
Eligible expenses include copays, coinsurance, deductibles, orthodontia, glasses/contact lenses, and much more. For a complete list, refer to IRS Publication 502: Medical and Dental Expenses, available at www.irs.gov/publications.
[NOTE: If you are enrolled in the HDHP with HSA, you are not eligible to participate in the Health Care FSA.]
Dependent Care Flexible Spending Account
Your Dependent Care (or daycare) FSA lets you use before-tax dollars to pay daycare expenses for children age 12 and under, or elder dependents unable to care for themselves. The care must be necessary for you and your spouse to remain employed. Care may be provided through live-in care, babysitters, and licensed daycare centers. You can be reimbursed only up to the amount available in your account.
Limited Purpose Flexible Spending Account
The Limited Purpose FSA works in combination with a Health Savings Account (HSA) to help you save money to pay for eligible dental and vision expenses only. You must be enrolled in the HDHP medical plan to be eligible for a Limited Purpose FSA.
Important Rules to Keep in Mind:
FSAs offer sizable tax advantages but are subject to strict IRS regulations:
- The IRS has a strict “use it or lose it” rule: If you do not use the full amount in your FSAs by the end of the plan year [you will lose any remaining funds.]
- Once you enroll in the FSAs, you cannot change your contribution amount during the year unless you experience a qualified status change.
- You cannot transfer funds from one FSA to another.
See the Benefits Guide or benefits summary for detailed information.
