Flexible Spending Accounts (FSAs) provide a tax-advantaged way to pay for eligible health care and dependent care (include elder care) expenses. FSAs let you save for eligible health and dependent care expenses with dollars that are automatically withheld from your paycheck before taxes. The amount you save depends on your tax bracket.
There are two Flexible Spending Accounts:
- Health Care Spending Account
- Dependent Care Spending Account
Each year you choose to participate in one, both, or neither account; you are not automatically re-enrolled. You cannot transfer money between the accounts.
Using Your Flexible Spending Accounts
- Decide how much to contribute each year during Open Enrollment. Contributions are deducted from your paycheck in equal amounts on a pre-tax basis during the calendar year.
- When you have eligible expenses, you can use the Mastercard FSA debit card sent to you when you enroll. Or, you can submit claims receipts to TRI-AD for reimbursement. You must file claims for 2019 expenses by March 31, 2020 or the unused amount is forfeited.
|Health Care Spending Account||Limited Purpose Spending Account||Dependent Care Spending Account|
|Contributions to a Health Savings Account (HSA)||You are not making HSA contributions||You/your spouse contribute to an HSA||n/a|
|Eligible Expenses||Out-of-pocket medical, prescription drug, dental and vision expenses||Out-of-pocket dental and vision expenses||Out-of-pocket expenses for dependent care, such as child day care, or eldercare while you are at work|
|FSA Contribution Maximum||$2,650 per year||$2,650 per year||$5,000 per year ($2,500 if married and filing separate tax return)|
|Access to Contributions||As soon as participation begins, you can be reimbursed up to your annual contribution amount, minus any reimbursements you have already received.
This reimbursement is made regardless of the amount currently in your account.
|You can be reimbursed for expenses only up to the amount currently in your account|
Eligible health care expenses include:
- Medical,* dental and vision care not covered by insurance
- Health care plan copayments, deductibles and coinsurance
- Nursing home and in-home medical care
- Over-the-counter drugs if prescribed by a doctor
- Psychologist/psychiatrist care
- Transportation to and from medical care
- Treatment for severe learning disabilities
* You are generally limited to reimbursement for eligible dental, vision and preventive care expenses if you or your spouse contributes to a Health Savings Account (HSA). Contact TRI-AD for more information.
Eligible dependent care expenses include:
- Nursery schools, day camps and licensed day care centers (all day tuition costs for kindergarten and higher grades for children age 5 and older are not eligible expenses)
- Day care in your home, except if the provider is the child’s parent, your dependent or your child under age 19
- Household services related to the care of an eligible dependent
The dependent must be under age 13 or otherwise meet the IRS guidelines.
You will be required to report the name, address and tax identification number of the care provider on your
federal tax return.
The IRS rules that allow mid-year changes in a Health Care FSA are much more restrictive than otherwise permitted for enrollment under a pre-tax health insurance plan or a Dependent Care FSA. While you may be allowed to make changes to other coverage options under some of the situations listed below, changes to your Health Care FSA are not permissible if:
- You move inside or outside of an HMO service area and change your health plan option.
- Your annual earnings decrease due to a change in your appointment percentage or other job change, and you still remain eligible to participate in the university’s Health Care FSA.
- Your anticipated health/dental/visions costs increase or decrease due to unanticipated factors. Some examples include the following situations:
- You funded your FSA with an expectation of having LASIK eye surgery and were advised you were not a good candidate for surgery.
- You funded your FSA with an expectation of having extensive dental work done. Schedule issues by your dentist’s office resulted in the needed work to be carried over several months, and all of the work could not be completed before the end of the plan year.
- You funded your FSA with an expectation of having limited out-of-pocket expenses for the year. Midway through the year, your dependent required outpatient mental health treatment that was only partially covered by your health plan, resulting in significant out-of-pocket expenses.
- You funded your FSA with an expectation of continued use of a particular prescription drug at a fixed co-pay, amount. Your physician determined it was necessary to change the medication to a drug with a higher co-pay, or your condition improved and you no longer needed to take the drug.
These are only a few examples, but the IRS has ruled that the employee’s intent when signing up for a Health Care FSA is not relevant. The Health Care FSA remains available to reimburse other out-of-pocket medical expenses and a mid-year change is not allowed under these circumstances. Please keep this in mind when deciding how much to contribute to a Health Care FSA. You forfeit any contributions you cannot claim.
The following information lists permissible events that allow you to make a mid-year change in your Health Care FSA and the corresponding election change that may be made. You must notify the Ensign Services Benefits Call Center at 877-352-8104 within 30 days of the event and be prepared to provide documentation of the change within 30 days of the event:
- Change in Your Legal Marital Status by marriage, death of spouse, divorce; or annulment. If you marry, you may increase your election when a family member is added; or decrease your election if: you, your spouse or dependents become eligible under your new spouse’s employer’s health care FSA plan; and your spouse is a participant in his or her employer’s plan, and coverage for the affected individual becomes effective or is increased under the other employer’s plan. If you cease to be married, you may decrease your election for your former spouse who loses eligibility. You may enroll in or increase your own election only if you have lost coverage under your former spouse’s health care FSA plan.
- Change in Number of Your Tax Dependents by birth, death, adoption, or placement for adoption. If you gain a dependent, you may enroll in or increase your election for the newly acquired dependent. If you lose a dependent, you may decrease your election for the dependent who loses eligibility.
- Changes in Employment Status and Leaves of Absence. Changes that affect the eligibility of the employee, the employee’s spouse, or the employee’s dependent, including termination or commencement of employment; strike or lockout; commencement of or return from an unpaid leave of absence. If you terminate employment or go on an unpaid leave of absence, you may change your election amount or terminate coverage if some other qualifying change in eligibility occurred during that leave. If you return from unpaid leave of absence, you may start a Health Care FSA or change your election amount if some other qualifying change in eligibility occurred during the leave. If your spouse terminates employment, or goes on an unpaid leave of absence, you may enroll in or increase your election if your spouse or dependent loses eligibility for participation in their employer’s health plan. If your spouse or dependent commence employment or returns from an unpaid leave that triggers a gain in eligibility under his or her employer’s plan, you may decrease your election if your spouse or dependent gains eligibility and enrolls in his or her employer’s health plan. An increase in hours does not allow you to change your Health Care FSA.
- Certain Judgments, Decrees, or Court Orders. If a judgment, decree, or court order from a divorce, legal separation, annulment, or change in legal custody requires that accident or health coverage for your dependent child (including a dependent foster child) be provided by you, you may change your Health Care FSA election to provide the child with corresponding coverage. Your spouse, former spouse, or other individual, you may change your Health Care FSA election to decrease corresponding coverage for the child if the other individual actually provides the coverage.
- Eligibility for Medicare and Medicaid. If you, your spouse, or your dependent are enrolled in an Ensign Services Health Plan and become entitled to and enroll in Medicare or Medicaid (other than coverage solely for pediatric vaccines), then for that individual you may decrease your Health Care FSA election if the Medicare/Medicaid coverage is more comprehensive, or you may increase it if the Ensign Services Health Plan was more comprehensive. If you lose eligibility for Medicare or Medicaid, then for that individual you may increase your Health Care FSA election, or decrease it if the Ensign Services Health Plan is more comprehensive.