FSA Your Flexible Spending Account (FSA) What is a FSA? There are two types of Flexible Spending Accounts: Health Care and Dependent Care Flexible Spending Accounts (FSA) help you save money by providing a way to pay for certain types of health care and dependent care on a pre-tax basis.
How a FSA works During Open Enrollment you decide how much money you want to contribute for the year (there are limits). You have only one opportunity a year to enroll, unless you have a qualified “life change”. The amount you designate for the year is taken out of your paycheck in equal installments each pay period and placed in a FSA account. As you incur medical expenses that are not fully covered by your insurance, you may submit your expenses for claims transactions using one of the following options: 1) Explanation of Benefits form from your insurance carrier after a claim has been paid; 2) Detail claim from the provider of services (ex: physician/ dentist) on the provider of services form with all information related to the service and expenses; 3) A Prescription form that you receive from the Pharmacy with the information on each prescription you are submitting; 4) A computer form from a Pharmacy for prescriptions filled at that Pharmacy with all detail information related to the prescriptions/date/costs You may submit any one of the above to evidence claim payment to Blue Water Administrators.
A way to save taxes Enrolling in a FSA can save you money by reducing your taxable income. Your total savings will depend upon your family income, tax status, and expected amount of health and dependent care costs. The contributions you make to a Flexible Spending Account are deducted from your pay BEFORE your Federal, State, or Social Security Taxes are calculated and are never reported to the IRS. The end result is that you decrease your taxable income and increase your spendable income. You can save hundreds or even thousands of dollars a year.
Estimate expenses carefully To receive the greatest savings, you must carefully estimate the amount of eligible out-of-pocket expenses you will have for the year. Once you have estimated the total annual amount, divide it by 26. That amount is what you may
12 Employee Benefits Guide
Administered by Blue Water Administrators
want to have deducted from your gross pay (before taxes) each pay period to be used to fund your Flexible Spending Account. If you terminate before the end of the plan year and have an account balance you may be eligible to elect Cobra for this benefit. If you do not elect Cobra, any unclaimed contributions will be forfeited. You have 60 days from date of termination to file claims for expenses incurred prior to termination. Please see SPD for complete plan details.
Do not over estimate Be conservative in your calculations. If you do not incur eligible expenses for the full amount you elected to put in your FSA, the remaining balance in your account will be forfeited according to IRS regulations. Use it or lose it!
Changing your enrollment You should also remember that once you have made an election for the plan year, you cannot change it until the next annual Open Enrollment period unless you have a qualifying life event. If you do have a qualifying life event and you want to change an FSA, it is your responsibility to do so within 31 days of the life event.
Eligibility If you are a full-time employee, you may enroll in a Flexible Spending Account. NOTE: Starting January 1, 2011
A closer look at Health Care FSA’s Health Care Flexible Spending Accounts allow employees to set aside pre-tax dollars taken through a payroll deduction to pay for expenses not covered by any medical or dental plan in which you may be enrolled. These pre-tax dollars are set aside in a personal flexible spending account until needed. The most you may set aside for this account is $3,500 per year.
Eligible expenses According to IRS regulations, the following expenses are eligible to be claimed against a Health Care FSA. These expenses must be incurred during the plan year and must not be eligible for reimbursement from insurance policies or any other source. Also, expenses can only be incurred by you, your spouse, or any dependent (if you furnished over one half of the dependent’s support during the plan year). Please use the list on the next page to estimate the amount you wish to put in your Health Care FSA. We encourage you to refer to this list during the year to be sure you are taking full advantage of your FSA.