What You Need To Know
Flexible Spending Accounts (FSAs) let you set aside pre-tax dollars to use on qualified expenses. This helps you save money by paying for certain health and dependent care expenses on a tax-free basis.
Save in Two Ways!
You have two FSA options: the Health Care FSA (or Limited-Purpose FSA if you’re enrolled in the HDHP) and the Dependent Care FSA. You can enroll in one or both, depending on your needs.
Health Care FSA
A Health Care FSA lets you set aside pre-tax dollars from your paycheck to help cover eligible out-of-pocket health care costs. These costs can include medical, dental, vision, prescription expenses, copays and deductibles.
How the Health Care FSA Works
How the Health Care FSA Works
Each year, you can contribute up to the maximum amount, per IRS limits, on a pre-tax basis. Use this tax-free money to pay for eligible health care expenses.
You have from January 1 to December 31 to use your Health Care FSA dollars. You can carry over a portion of your unused balance into the next year, based on the approved IRS limits for that calendar year.
Eligible Expenses
Eligible Expenses
| Eligible Expenses | Ineligible Expenses |
|---|---|
|
|
Get a detailed list of eligible expenses on the Benefits Service Center website or through Publication 502 on the IRS website.
Paying for Eligible Health Care Expenses
Paying for Eligible Health Care Expenses
When you enroll, you’ll receive a debit card to pay your doctors, pharmacies and other providers directly from your Health Care FSA debit card. There is no debit card for the Limited-Purpose FSA. You will need to submit a reimbursement form and receipts to UHC for approval.
Per IRS rules, you may need to provide a receipt or other documentation to confirm the expense is eligible. Make sure to keep your receipts, which must include the date of service, the type of service or product, and the amount. If this information is requested and you do not submit it, your FSA debit card could be deactivated.
Dependent Care FSA
A Dependent Care FSA lets you use pre-tax dollars from your paycheck to cover eligible dependent care expenses, such as child day care. This includes care for children under the age of 13 and care for adults who are unable to care for themselves.
How the Dependent Care FSA Works
How the Dependent Care FSA Works
The maximum annual amount you can contribute per household to a Dependent Care FSA is $7,500 if you’re a single parent or if you’re married and file a joint tax return. If you’re married but file separate tax returns, the maximum annual amount is $3,750 per parent.
Just remember that Dependent Care FSAs are use-it-or-lose-it accounts, so you need to use up your balance by the end of the year or you’ll lose the remaining funds.
Eligible Expenses
Eligible Expenses
You can use your Dependent Care FSA to cover eligible expenses like child day care after-school care, and preschool tuition.
Get a detailed list of eligible expenses on the Benefits Service Center website or through Publication 503 on the IRS website.
Paying for Eligible Dependent Care Expenses
Paying for Eligible Dependent Care Expenses
The Dependent Care FSA doesn’t include a debit card. To cover eligible dependent care expenses with your Dependent Care FSA, simply submit a claim for reimbursement. You’ll need the tax ID number of your dependent’s day care provider. You’ll get paid back with tax-free dollars for your claims, up to the current total amount in your account that’s been deducted from your paycheck.
The Rules
- The FSA plan year runs from January 1 through December 31, or your benefits-effective date, if you are a new hire or just became eligible for benefits.
- If you sign up for one or both FSAs, your contributions will be taken out of your paycheck in equal amounts throughout the year, starting with your first paycheck after your benefits-effective date.
- To participate every year, you need to enroll (or reenroll) in the FSA during Open Enrollment.
- FSAs are use-it-or-lose-it accounts. You can roll over a small portion of unused health care FSA funds to the following year, but you can’t roll over any unused funds from a dependent care FSA. These dollars will be forfeited, which means that any money left in your account by the deadline will be lost if it is not used. Look at your out-of-pocket expenses for the previous year to help you decide how much money to set aside for the upcoming year.
How the Spending Accounts and the Health Savings Account Differ
| Health Care FSA | Limited-Purpose FSA | Dependent Care FSA | Health Savings Account (HSA) | |
|---|---|---|---|---|
| Eligible expenses | Eligible medical, dental, vision and Rx expenses, including copays and deductibles | Eligible dental and vision expenses | Eligible child day care costs and dependent care costs | Eligible medical, dental and vision expenses, COBRA premiums, long-term care premiums, copays and deductibles |
| Things to consider | Use it or lose it — funds do not roll over from year to year beyond the carryover limit (see carryover rules below) | You must be enrolled in a High-Deductible Health Plan (HDHP) and Health Savings Account (HSA). Can only be used for dental and vision expenses. Use it or lose it — funds do not roll over from year to year beyond the carryover rules below. | Dependents include children under age 13 and/or a spouse or adult dependent that is unable to care for themselves | Must be enrolled in an HDHP |
| Funded by | Your pre-tax contributions | Your pre-tax contributions | Your pre-tax contributions | Your pre-tax contributions and Republic Services' contributions |
| Funds are available | Your entire annual elected amount will be available to you on day one of your plan effective date | Your entire annual elected amount will be available to you on day one of your plan effective date | Available funds accrue with each pay period, up to the amount you choose to contribute from your paycheck | Up to the amount withheld from your paycheck, plus any funds already in your account. Republic Services contributions are prorated and deposited into your account on a quarterly basis. |
| Carryover rules | You are allowed to carry over a portion (to be determined by the IRS) of your unused balance into the next year. The remainder of your unused balance will be lost if it is not used by the deadline. | You are allowed to carry over a portion (to be determined by the IRS) of your unused balance into the next year. The remainder of your unused balance will be lost if it is not used by the deadline. | No carryover allowed — any unused balance will be lost if it is not used by the deadline. | Unused funds carry over from year to year. |
| Debit card | Yes | No | Yes | Yes |
| When coverage ends | Remaining balance is forfeited unless you elect to continue the HCFSA through COBRA until the end of the plan year. | Remaining balance is forfeited unless you elect to continue the LPFSA through COBRA until the end of the plan year. | Remaining balance is forfeited. | Employees owns all balances in the account, regardless of employment status. |
How To Get Started
During your new hire or Open Enrollment period, you’ll be given the option to elect an FSA. Reenrollment in an FSA is required every year if you wish to participate. Your current election will not roll over into the new plan year.
