FSA - Flexible Spending Account
A Flexible Spending Account or FSA, allows employees to use pre-tax deductions from their paychecks or employer funding to pay for any qualified health expense. Participant elections are made once per year, during the open enrollment, or when a qualifying life event is met. Unused amounts at the plan year-end are forfeited to the plan – the infamous Use-It-or-Lose-It rule. Qualified expenses include medical, dental, vision, and prescription costs. Other fees, like over-the-counter drugs, can be eligible with a doctor’s approval.
Contributions are deducted each pay period. With an FSA, you elect to have contributions deducted from your paycheck in equal installments until you reach the yearly maximum that has been specified.
- Immediate Tax Savings – The dollars deducted from your paycheck into your fund will not count as taxable income.
- Medical Expense Reimbursement – allows the reimbursement of any qualifying medical expenses paid for out-of-pocket.
- Limited Purpose Medical FSA & Limited FSA works with a qualified, high-deductible health plan (HDHP) and a Health Savings Account (HSA).
- A Limited FSA will only reimburse for vision and dental expenses.
- Dependent Care FSA – Reimbursements of dependent care expenses for eligible dependents, like daycare, are allowed.
- Enjoy Tax Savings – Quick and easy access to your funds, and you can use your prepaid benefits card or request to have funds deposited into your bank account.
- Reduce Filing Hassle and paperwork by using your prepaid benefits card.
- 24/7/365 Secure Access to your accounts on our consumer portal.
- User-Friendly Mobile Application – file claims, stay up to date on balances and action required and get one-click answers to benefits questions.
Types of Flexible Spending Accounts
Limited Purpose FSA: Eligible to reimburse only dental and vision expenses. Reimburses dental and vision expenses only, until the IRS statutory deductibles are met where it converts to a full FSA, able to reimburse all FSA eligible expenses. Combination Limited Post-Deductible FSA: Reimburses dental and vision expenses; after the IRS statutory deductibles are met, eligible to reimburse all FSA expenses.
Dependent Care Flexible Spending Account (DCAP)
NOTICE for 2023:
The health FSA contribution limit is $3,050 for 2023, up from the previous year’s amount of $2,850.
If your spouse has a separate FSA under another employer plan, they can also make a maximum contribution.
As a rule, you can’t change your Health Care FSA (HCFSA), Limited Expense Health Care FSA (LEX HCFSA), or Dependent Care FSA (DCFSA) election amount during a benefit period (the plan year). That’s why it’s essential to plan an election that suits your needs for your entire benefit period. But there are qualifying life events (QLEs) circumstances when you can make changes.
Qualifying Life Events
- The IRS determines what counts as qualifying events. They typically include:
- Change in employment status for you, your spouse, or your dependent.
- Legal marital status changes (marriage, divorce, or spouse’s death).
- Change in the number of your dependents (birth or adoption of a child or death of a dependent)
- Change your dependent’s eligibility (for example, your child reaches age 13 and is no longer eligible under a DCFSA).
- Change in child care or elder care provider change in cost or coverage.
- This applies to a DCFSA only. It doesn’t apply to an HCFSA or LEX HCFSA.
Download the FSA calculator.