A Flexible Spending Account, or FSA, is a benefit program that allows you to pay for a variety of qualifying expenses. Your FSA is funded through your pre-tax dollars. Your election amount must be predetermined and any unused funds at the end of the plan year are forfeited to your plan sponsor. The University offers two types of Flexible Spending Accounts: Health Care FSA and Dependent Care FSA.
In order for an expense to be considered eligible, the medical care must incur within your period of coverage. You may not seek reimbursement for expenses that were incurred prior to your participation in the plan. You cannot seek advanced reimbursement. The service must be provided before an expense may be reimbursed. An expense is considered "incurred" when you are provided with the care that gives rise to the expense, not when you are formally billed or pay for the medical care.聽
2024 Maximum Contributions Allowed:
- Health FSA - 3,200
- Dependent Care FSA - 5,000 (or 2,500 Married Filing Separately)
By taking advantage of the FSA, you can:
- Reduce your taxes
- Increase your take-home pay and spending power
- Pay for rising healthcare and dependent care costs with pre-tax dollars
Use it or Lose it!
Plan your participation carefully. While the FSA is a benefit that will save you money, there are some risks. To minimize your risk, keep these key points in mind when determining your annual election amount:
- Only expenses incurred during your period of coverage can be reimbursed by the FSA. Expenses incurred before or after the period of coverage are not reimbursable.
- An expense is considered "incurred" when you are provided with the care that gives rise to the expense, not when you are formally billed, or pay for the service.
- Unused dollars in the FSA at the end of the plan year cannot be carried over, and the unused dollars will be forfeited to the plan sponsor.
- Your election is irrevocable. You cannot change or cancel your election during the plan year, unless you have a qualifying "Change in Status" and your adjusted election is consistent with such a change.
The key to getting the most from your FSA is to maximize your contributions based on your anticipated eligible expenses. In order to plan your contributions, follow these steps:
- Review the list of eligible expenses
- Review your eligible expenses from last year
- Write down any new eligible expenses you anticipate in the new plan year
- Estimate your cost for eligible expenses (uncovered or partially covered expenses only)
Under your employer's FSA plan, you may elect to contribute to the Health FSA which will allow you to seek reimbursement for qualified medical expenses.聽Although you contribute to this account on a per payroll basis, your entire election amount is available on the first day of your coverage period. The Health FSA plan has a two-and-a-half month grace period, allowing you to use the current year's balance through March 15 of the following year.聽
Qualifying medical expenses include only those expenses incurred by:
- Yourself
- Your spouse
- Dependents you list on your federal tax return
Eligible medical expenses may include:
- Medical doctors, dentists, eye doctors, chiropractors and psychiatrists/psychologist visits
- Prescription drugs, insulin treatments, vaccines and contraceptives
- Medical examinations, X-ray and laboratory services
- Medical aids, hearing aids/batteries, eyeglasses/contact lenses, wheelchairs and guide dogs
- Ambulance services, other travel costs to obtain medical care and mileage to and from your medical providers
- Weight loss programs (if prescribed by your physician)
- Substance abuse programs for the treatment of alcoholism and smoking cessation programs
- Orthodontia
Qualifying dependent care expenses include only those expenses incurred by:
Qualified dependents under a DCFSA include children under the age of 13, dependents of any age who are physically or mentally incapable of self-care, and even adults in some cases if they are provided more than half of that person's maintenance costs in a given year. Most importantly, expenses for the care of these dependents is only eligible if these care services enable the account holders/spouses to work, look for work or go to school full-time. If an employee has a spouse that is a stay-at-home mother or father, he or she cannot participate in dependent care FSAs ().
Eligible dependent care expenses may include:
- Daycare
- After School Daycare
- Preschool
- Adult Day Programs
- In-home care
- Summer Day Camp