Flexible Spending Accounts (FSAs) allow employees to save money on taxes while paying for certain kinds of eligible expenses. Under a FSA, employees set aside money from their pay to cover eligible expenses before taxes are calculated and withheld. This money can be used to reimburse employees for these eligible expenses. FSAs are optional and the university offers two types of FSA accounts.
FSA enrollment does NOT carry over from year to year. Employees MUST re-enroll online each year to contribute to an FSA.
When an employee decides to enroll in either or both FSA accounts, contributions are deducted from his/her pay-check before he/she pays any federal, state, city, or Medicare taxes. Because the employee's taxes are calculated on a lower income, he/she should pay less tax.
During the year, employees pay eligible health care and dependent day care expenses, then request reimbursement from his/her account. The eligibility of an expense is determined by the date on which the health care or day care service was provided; not by the date the employee paid the bill.
If an employee incurred an eligible medical expense in December 2012, but paid the bill in January 2013, that expense is considered a 2012 expense. Therefore, the employee can be reimbursed under his/her 2012 Health Care Account.
Employees have until March 15, 2013 to request reimbursement for eligible expenses with a date of service from January 1, 2012 through December 31, 2012. Employees forfeit any remaining account balance if 2011 claims are not submitted by March 15, 2013.
Employees will be able to carry over any unused account balance from 2012 to 2013 for the Health Care and Dependent Daycare Accounts. Employees have from January 1, 2013 to February 28, 2013 (the grace period) to incur expenses with a date of service within the grace period to use up their 2012 account balance.
NOTE: Eligible claims for 2013 incurred within the grace period and submitted by March 15, 2013 will reduce the unused account balance carry-over from 2012. If an employee submits eligible 2013 claims, before submitting any remaining 2012 claim, and they reduce the balance carry-over to zero the 2012 claims will not be reimbursed.
As a result of the Health Reform legislation, use of a Health Care Flexible Spending Account will change on January 1, 2012. Many types of over-the-counter items will require a prescription in order to be eligible for FSA reimbursement. In addition, employees will not be able to use the Chard Snyder Benny debit card to purchase over-the-counter medications that require a prescription. A copy of the prescriptions will be required once each year (by Chard Snyder) for claims payment.
A partial list of items that will require a prescription:
A current list of eligible items can be found at www.chard-snyder.com.
Employees will continue to be able to use their FSA money to purchase over-the-counter items that are not considered a drug or medicine such as bandages, blood pressure monitors, contact lens solution, etc.
Employees may participate in the Dependent Daycare Account if they have a qualified dependent, are actively at work, and one of the following applies:
A qualified dependent is:
As an alternative to the Dependent Daycare Account, IRS regulations offer another option: the federal tax credit for dependent care.
Federal Tax Credit: An employee cannot claim a federal tax credit for dependent care and request reimbursement from the Dependent Daycare Account for the same expenses. In addition, expenses reimbursed from the account reduce, dollar for dollar, the amount of dependent care expenses you may apply to the federal tax credit. Therefore, an employee must choose one method or the other. Employees should consult their financial advisor to determine which is better for them to use. If an employee and his/her spouse file taxes separately, they may not use the federal tax credit.
|Health Care Flexible Spending Accounts||Dependent Care Flexible Spending Acocunt|
Generally, any health care expenses that are eligible for an income tax deduction under IRS regulations. Some expenses that might be eligible include:
- medical and dental deductibles and copayments
You must meet the certain requirements to be eligible for this account. See Dependent Daycare Account Eligbility for details.
Daycare for your qualified dependent includes services provided in the home or in a licensed dependent care center. The center must be licensed by the state if there are more than six people that are cared for.
|Ineligible Expenses||- non-prescription drugs except as noted above
- mileage and parking
- health care plan premiums
- cosmetic surgery (unless it is necessary to correct a deformity resulting from a congential abnormality, injury or disfiguring disease, or to restore bodily function)
- medical practice retainers and/or access fees*
|- are provided while you are on a leave of absence
- overnight expenses for summer camp
- are provided by the employee's spouse, child under age 19, or anyone claimed as a tax exemption by the employee
|Minimum Annual Contribution||$120||$120|
|Maximum Annual Contribution||$2,400||The tax filing status determines the maximum contribution amount.|
|Reimbursement Limits||An employee can be reimbursed the full amount of his/her account at any time during the year.||An employee can be reimbursed up to the amount he/she has contributed by the date he/she requests reimbursement.|
Dependent Daycare Account
Health Care Account
How to use the debit card: (Available with the health care FSA only)
Note: Employees cannot use the debit card to purchase over-the-counter medications that require a prescription.
Examples of merchants accepting the debit card include:
Because FSAs offer such a significant tax break, the Internal Revenue Service (IRS) applies these strict rules to their use:
Medical Practice Retainers and/or Access Fees*
UC’s flex plan administrator, Chard Snyder, is required to follow IRS Code Section 213(d) to determine medical expenses that are eligible for reimbursement under the Health Care Flexible Spending Account. Medical practice retainers or access fees are not eligible for reimbursement under the Health Care Flexible Spending Account.