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What's an FSA?

A Health Care Flexible Spending Account (FSA) lets you set aside part of your paycheck to pay you back for future health care or dependent care expenses. You decide how much to contribute to the account, and the portion of your paycheck you put into your FSA is taken out before you pay federal income taxes, Social Security taxes and most state taxes.

How can I use the money?

The Internal Revenue Code specifies how your health care FSA funds can be used.  Approved expenses include medical, dental and vision products, or services performed by medical professionals to diagnose, treat or prevent diseases for you and your family. You may be able to use your FSA to pay for expenses like co-payments, or medical expenses not covered by your health plan, like:

  • Dental care/orthodontia
  • Eye exams
  • Hearing aids
  • Laser eye surgery
  • Nicotine gum or patches/smoking cessation programs
  • Vision care products such as glasses and contact lenses

You can also use FSA funds for other items such as alternative drugs and medicines, exercise equipment and programs, even vitamins when they are prescribed by your physician.

What’s the difference between a “health care” FSA and a “dependent care” FSA?

The difference is in how you can use it. Money in your health care FSA can be used to pay for health care expenses, such as prescribed medications, vision and dental care. Your dependent care FSA helps you pay for expenses incurred to care for children or other individuals while you work.  Examples of eligible expenses include day care, preschool, babysitting or elder care. Read more about who qualifies as a dependent in Publication 503 on www.irs.gov

Can my employer offer one type of account and not the other?

Yes. Your employer may offer a health care FSA or a dependent care FSA, or both.

When can I change how much money I contribute to my FSA?

Depending upon the terms of your FSA (check your Summary Plan Description), you can change the amount:

  • During the annual enrollment period for your plan. Talk to your employer to learn more about when your next enrollment period begins.
  • If your family situation changes. You may be able to change your FSA election due to a marriage, birth or adoption of a child, divorce or the death of a spouse.
  • If your employment situation or cost of health insurance or dependent care changes.

How long do I have to submit claims?

You can usually submit a claim any time during the plan year. For example, if your benefit year runs from January through December, and you visit the doctor shortly after your plan year starts in January, you have at least through December to request reimbursement. Some plans give you a “run-out” period, which is additional time to submit claims. So if your plan year ends on March 31 and you have a two-month run-out period, you can submit claims until May 31 as long as the expenses were incurred before the end of the plan year.

You can log into the member website to see your plan's claim submission rules. From the Spending tab, view the Spending Account Summary details.

Your plan's "Run Out Date" (last day to submit claims) and "Grace Period Date" (date your plan is closed and no further claims are processed) will be displayed on the web page.

Can I keep the money that I don’t use during the year?

Your company’s plan has a specific “Use-It-or-Lose-It” rule for any funds remaining in your account. There are three different rules and your employer must choose one: 1) under the original Use-it-or-Lose-It rule, you lose—or forfeit—any funds you have not used by the end of the plan year; 2) a recent rule change gives your employer the option to allow you to carry over up to $500 of your unused medical FSA funds into the new plan year; or 3) your employer may offer up to 2 ½ months in the new plan year to incur and submit claims against your remaining account balance. With any of these options, your plan may also offer additional time after the plan year is over to submit your final claims for that year. Check your open enrollment or benefit materials, your company’s Human Resources website, or your Summary Plan Description to find out which rule applies to your company’s plan.

To help avoid losing leftover funds, estimate your annual health care expenses to determine the right contribution amount. You can track your FSA spending on your member website, which may help you estimate even more accurately next year.

What happens to my money if I leave my job?

While you don’t get to take FSA funds with you, you may still be able to submit claims for a period of time after you leave your job. You’ll just need to be sure that the expenses were incurred during the plan year and before you left your job. But check on your plan rules — you may only be able to submit claims to the FSA until your last day on the job, or you may be able to submit claims until the end of the plan year.  Your plan may also include rules for FSAs under COBRA.




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