What Is A Flexible Spending Account (FSA)?
A Flexible Spending Account allows you to set aside some of your salary to fund a reimbursement account to pay qualified medical or dependent care expenses with gross earnings instead of paying them with after tax pay. This produces significant savings because every dollar redirected into a FSA escapes federal, state and social security tax forever.
How Does It Really Increase Your Take Home Pay?
When you contribute to an FSA, you decrease your taxable income because the contributions are taken before income taxes are calculated. By redirecting a part of your salary to an FSA, you bank your money in a TAX-FREE account that is there to pay for expenses that used to eat away at your disposable income. Use the Savings Calculator to see what your potential savings could be.
How Does The Plan Work?
Easier than you think. First, you decide how much to set aside in a medical and/or dependent care account for the plan year. Your annual election is divided by the number of pays in the year and deducted equally from each pay before taxes are taken out. Your contributions are deposited into your FSA account and are returned to you tax free when you use your debit card or submit reimbursement claims for qualified expenses.
How Do I Get Money From My Account?
Use your BASIC Debit Card to access your funds, or submit a completed, signed claim form (available from your employer or on this website) to BASIC NEO with a copy of the medical or dependent care receipt showing the charges and dates of service. For manual reimbursements, BASIC NEO will issue you a check or direct deposit (if offered by your employer) into your personal checking account, up to your annual election for medical care and up to the balance in your account for child care. Click here for more information.
What Do I Need To Submit A Claim?
All claims must be submitted with a completed, signed claim form. A copy of a receipt or statement from the third party provider showing the date of service (not date of payment) and charges incurred must be included. An insurance Explanation of Benefits (EOB) form is excellent documentation since it shows all necessary information. We cannot accept a receipt that merely shows an amount. We also cannot accept cancelled checks as documentation of your expenses. We recommend that you keep copies of all your claims in case of IRS audit. Learn more: How to Submit a Claim.
Can I Change My Election During The Plan Year?
IRS regulations require that you make your election only during open enrollment before the beginning of the plan year. This means you can only join the plan during open enrollment or when you first become eligible. You may change your Medical FSA election during the plan year if you have a “Change in Status” event and the change in election is consistent with the change in status. Review the next question for more information on what qualifies as a change in status.
You may change your Dependent Care FSA election any time you have a change in the cost of the day care, or change providers.
What Is Considered A Change In Status?
The following events are recognized as change in status events that allow an employee to change his FSA election outside of open enrollment:
What If I Don’t Use All The Money In My Account?
The Treasury Department’s ruling on October 31, 2013 modifies the “use-it-or-lose-it” provision to allow the rollover of up to $500 of unused Health FSA funds to the next plan year. However, your plan may or may not have adopted this new provision. Contact NEO or your HR department for verification. Unused money at the end of a plan year that is not eligible for rollover is forfeited per IRS regulations. Plan carefully and make your election based on expenses you expect to incur. Use our Savings Calculator tool to help you decide how much to put into the plan.
What Expenses Can Be Paid Through The Plan?
You can use pre-tax dollars to pay for qualified unreimbursed expenses incurred during the plan year. Expenses fall into two major categories: Unreimbursed Medical expenses, or qualified Dependent/Child Care expenses. For an updated list of Qualified Medical Expenses click here.
Why Do I Have To Submit Documentation For A FSA Debit Card Transaction?
Using an FSA debit card is an easy way to pay for qualified expenses directly from your FSA plan. You do not need to send receipts to NEO for certain expenses, such as copays for office visits and prescriptions, or transactions that the merchant can verify at the point of purchase. However, all other FSA debit card transactions must be documented to verify that the expenses comply with IRS guidelines. You will be asked to send a claim form and documentation for these transactions. Please click here to learn more about FSA debit card purchasing guidelines.
How Do I Submit a Reimbursement Claim for Orthodontia Care?
Click here for the “Guidelines for Submitting Orthodontia Claims to NEO for Reimbursement.”,
My spouse has an FSA program at work too. Can I still contribute the plan maximim to my Health FSA even if my spouse is contributing at his/her workplace?
You can. Each employer’s plan sets a contribution maximum that is outlined in the FSA plan document. Refer to your Summary Plan Description or see your Benefits Department for additional information.
My spouse has an FSA program at work too. Can I still contribute the full $5,000 to a Dependent Care FSA even if my spouse is contributing at his/her workplace?
No. The total that each family can elect for a Dependent Care FSA must not exceed $5,000 per household ($2,500 each if married and filing separately) in accordance with IRS rules. Therefore, you must ensure that you and your spouse limit your individual elections to total no more than $5,000 combined.
Still Have Questions?
Please call (1.800.775.FLEX) or email for more information! We can answer questions about your personal situation and develop an FSA plan based on your individual needs.