Flexible Spending Account
A Tax Effective Way to Pay and Save
Flexible Spending Accounts (FSAs) let you pay for certain health and day care expenses on a pre-tax basis. You may contribute to a Spending Account even if you aren’t participating in any of our other Flexible Benefits Programs.
How You Save
Your FSA contributions are deducted from your paychecks before you pay most taxes on your earnings. That means your total taxable income is reduced, and your taxes are less because they’re based on a smaller amount of income. Also, the reimbursements for claims you receive from your accounts are not taxed.
When you enroll, you decide how much money to contribute to your personal accounts for the coming year. These contributions are deducted in equal installments from your paychecks throughout the year and deposited in your accounts. To receive funds from your account, you simply file a claim for reimbursement or use the FSA debit card for your Health FSA.
Some Important Rules
You should carefully decide how much money to place in your Flexible Spending Account because:
- After you enroll, you can’t change the amount you contribute for the year, because your elections stay in effect during the entire plan year (January 1 through December 31). You may not change the amount of your contribution during the year unless you have a “qualified status change.”
- You can’t transfer funds from one Flexible Spending Account to another.
- During Open Enrollment, if you are transitioning from a General Health FSA to an HSA, the IRS requires that your FSA balance must be at $0.00 before you can start contributing to your new HSA. Otherwise, contributions will be delayed.
- If you use the Dependent FSA, the IRS won’t let you take a dependent care credit on your tax return for reimbursed expenses. For some people, the tax credit may be greater than the savings from an FSA. If you’re unsure which is best for you, consult a professional tax advisor.
FSA - Use It or Lose It
Another reason to plan your contributions carefully is because of the IRS “use it or lose it” rule for Flexible Spending Accounts. You may only be reimbursed for eligible expenses that you incur January 1 through December 31; however there is a grace period of 2 ½ months (until March 15) to incur claims.
Paper claims for reimbursement must be submitted by May 31 of the following year. Any money not used will be forfeited.
General Health FSA
Important: CDHP Premier Medical Plan members are not allowed to enroll in the General Health FSA. Please refer to the “Limited Purpose Health FSA” section.
The General Health FSA is designed specifically to reimburse you for medical, dental and vision expenses that are not paid by your health care plan. It cannot be used to pay the costs of medical premiums.
The costs of many over-the counter items (crutches, supplies such as bandages, and diagnostic devices such as blood sugar test kits, etc.) are eligible for reminbursement through your General Health FSA.
For a list of eligible expenses, please visit netbenefits.com
Contribution Limits
You may contribute a minimum of $500 and up to a maximum of $3,050 to the General Health FSA
Limited Purpose Health FSA
Important: You must be enrolled in the CDHP Premier Medical Plan to participate in the Limited Purpose Health FSA
In addition to the Health Savings Account (HSA), you may elect to participate in the Limited Purpose Health FSA. This FSA is designed to reimburse you for out-of-pocket health expenses that do not apply to the CDHP Premier Medical Plan deductible, such as dental and vision expenses. Like the General Health FSA, the Limited Purpose FSA is not portable, and the Limited Purpose FSA dollars do not roll over from year to year.
The true benefit of the Limited Purpose FSA is to help you conserve HSA dollars for medical expenses that apply to the CDHP Premier Medical Plan and to allow you the maximum ability to accumulate HSA dollars from year to year.
Contribution Limits
You may contribute a minimum of $500 and up to a maximum of $3,050 to the Limited Purpose Health FSA.
Dependent Care FSA
The Dependent Care FSA allows you to pay for eligible day care expenses on a tax-free basis. To be eligible, expenses must be for the care of:
- A dependent child under 13 years of age, or
- A disabled dependent adult.
These expenses must be required to enable you and your spouse to work or attend school on a full-time basis.
Contribution Limits
You may contribute a minimum of $500 and up to a maximum of $5,000 to the Dependent Care FSA.
Exception: If you are married and file separate tax returns, your maximum contribution is $2,500. Annual testing of the plan may result in elections being modified.
Accessing Your FSA Funds
There are several ways you can use the funds in your Healthcare FSA:
- You can use the Fidelity Healthcare Card associated with your Healthcare FSA to pay for eligible healthcare products and services.
- You can arrange to have your healthcare provider paid directly from your Healthcare FSA.
- You can also be reimbursed for the eligible expenses you pay out of pocket. You can submit a claim form with documentation for the
services or you can log onto netbenefits.com and set up direct transfer of funds into your personal bank account or by check.
There are two ways you can use the funds in your Dependent Care FSA:
- Pay My Provider. You can arrange to have your dependent care provider paid directly.
- Pay Me Back. You can be reimbursed for eligible dependent care expenses you pay out of pocket.
Here’s how you’re paid from each account:
- Each Health FSA participant will receive an FSA debit card. Upon request, additional cards may be ordered for other family members. You may use your FSA debit card at physician offices, drug stores and other health service providers. Important note: use of an FSA debit card does not relieve you from the responsibility of submitting receipts; this is an IRS requirement. Additionally, debit cards are not accepted for over-the-counter medications.
- For dependent care expenses, you may reimburse yourself if there’s a sufficient balance in your Dependent Care FSA at the time of
your claim. If you have a claim for more than your account balance, you’ll receive partial payment from the funds available. As you continue to make payroll deposits, you’ll automatically be reimbursed for any remaining claim amounts. FSA debit cards cannot be used for dependent care expenses.
