Health Care Flexible Spending Accounts (FSAs)

A flexible spending account (FSA) lets you pay for eligible expenses with tax-free money. You contribute to an FSA with pretax money from your paycheck. This, in turn, may help lower your taxable income. There are three types of FSAs — health care FSA, dependent care FSA and limited purpose FSA.

Health Care FSA
 A health care FSA helps you pay for eligible out-of-pocket medical, dental, vision, hearing and prescription drug expenses for you, your spouse and your tax dependents. Out-of-pocket expenses are those not covered by insurance or any other plan. These include deductibles, coinsurance, co-pays, and over-the-counter (OTC) items.

Dependent Care FSA
A dependent care FSA helps you pay for eligible child or adult day care expenses. These include day care, before and after school programs, nursery school or preschool, summer day camp and adult day care. These expenses are so that you and, if married, your spouse can work, look for work or attend school full-time. The care must be for your child under age 13, or for a spouse or dependent who isn’t able to take care of him or herself and who lives with you at least half of the year.

Limited Purpose FSA
A Limited Purpose FSA generally helps you pay for eligible dental and vision expenses. Eligible expenses may also include prescriptions and OTC items for dental and vision care. A Limited Purpose FSA may also cover other health care expenses after you meet your deductible. You can enroll in a Limited Purpose FSA if you have a Health Savings Account (HSA). A Limited Purpose FSA can help you save your HSA funds for the future.
 

It’s quite simple, really. You contribute, spend and save.

Contribute - Estimate the amount you expect to spend during the plan year on eligible out-of-pocket expenses. Out-of-pocket expenses are those not covered by insurance or any other plan. Select the FSA (health care, dependent care, and/or Limited Purpose) that’s right for you and choose how much you want to contribute. Your employer will deduct that amount from your paycheck in equal amounts each pay period. These deductions are pretax. Each FSA has its own contribution limit, which is set by the Internal Revenue Service (IRS).

Below are the 2023 limits.

• Health Care FSA contribution limit - $3,050
• Limited Purpose FSA contribution limit - $3,050
• Dependent Care FSA contribution limit -$5,000

These limits are subject to change annually. Your employer may set a lower limit. You should check your plan to know how much you can contribute.

Spend - Once funds are in your FSA, you can use the PayFlex Card^®, your account debit card, to pay for your eligible expenses, if offered by your employer. Or you can simply pay out of pocket and then submit a claim to pay yourself back. You can do this online, through the PayFlex Mobile^® app, or complete a paper claim form and fax or mail it to us.

Save - Your FSA contributions are tax-free. So when you use your FSA funds on eligible expenses, you end up saving about 30 cents on every dollar you spend.

The main benefit of an FSA is that the money you contribute is deducted from your pay on a pretax basis. Therefore, your taxable income is less. So, when you use your FSA funds, it’s like you’re saving about 30 cents on every dollar you spend.

When you contribute to an FSA, that money is deducted from your pay on a pretax basis. This means your contribution comes out of your paycheck before Federal, Social Security and in some cases, state taxes are deducted from your pay. Generally, Federal taxes range from 15% to 28% and Social Security taxes is currently 7.65% of your pay. So, you could save about 30 cents on every dollar you spend on eligible expenses.

Example: You have an annual salary of $60,000 and you decide to contribute $2,500 to a health care FSA and $2,000 to a dependent care FSA. With your pretax FSA contributions, you could save about $1,020. Here’s how it works.

Your plan will determine this. Although your employer can require that you take the medical or dental plan in order to have a health care FSA, not all plans are designed this way. You should check your plan documents to confirm this.

Your FSA election remains in place for the plan year. This is an IRS rule. The only way to change your FSA election during the plan year is if you have a status change event and as a result of that event, it’s necessary for you to change your election. Your employer’s plan determines which status change events are allowed. Below are some examples.

• Change in legal marital status (marriage, divorce, legal separation, annulment, death of a spouse)
• Change in number of tax dependents (birth, adoption, death)
• Change in employment status that affects benefit eligibility
• Dependent becomes or is no longer eligible under the plan (reaches limiting age, gains or loses student status)
• Change in residence that affects eligibility

Generally, you have 30 calendar days from the date of your status change to change your election. You’ll need to contact your Human Resources or Benefits Department to change your election.

Generally, funds left in an FSA at the end of the year are forfeited. This is the FSA “use-it-or-lose-it” rule. However, your plan may have a “grace period” or “carryover” feature, which can help reduce forfeitures.

If your FSA has a grace period, you have an additional two months and 15 days after the end of your plan year to spend your FSA funds.

If your FSA includes the carryover feature, you may be able to carry over up to $610 in unused funds to the next plan year. However, your employer sets your carryover amount.

If your FSA doesn’t have a grace period or the carryover feature, you may have a run out period. This gives you more time to submit claims for eligible expenses that you incurred during the plan year. Any funds left in your FSA after the run out period will be forfeited.

It depends on your plan. Your FSA coverage may end on your last day of work or it may end at the end of that month. You may still be able to submit claims for eligible expenses that you incurred during the time you had coverage. Your employer will let you know how and when to submit claims. You may also be eligible to elect COBRA coverage for your FSA.

You should contact your Human Resources or Benefits Department for more information.

Yes. For 2023, the health care FSA and limited purpose FSA contribution limit is $3,050. This limit is for each FSA participant. This means, if you and your spouse are eligible to participate in a health care FSA, you may each contribute to your own FSA, up to this limit. Employers may set a lower limit, so you should check your plan to know how much you can contribute.

Once funds are in your FSA, you can use the PayFlex Card^®, your account debit card, to pay for your eligible expenses, if offered by your employer. Or you can simply pay with cash, check or credit card, and then submit a claim to pay yourself back. You can do this online, through the PayFlex Mobile^®, or complete a paper claim form and fax or mail it to us.

After you incur an eligible expense, you can:

• Submit a claim online. You can upload or fax your documentation to us.
• Submit a claim using the PayFlex Mobile^® app. You can download it for free* from your mobile app store. You’ll use the same username and password that you use for this website.
• Complete a paper claim form and mail or fax it with your documentation. You can find this form in Documents & Forms.

*Standard text messaging and other rates from your wireless carrier still apply.

It depends on your expense type.

• If your expense went through your medical or dental plan, you’ll need to send an Explanation of Benefits (EOB) from your plan. This is the best form of documentation.
• If your expense didn’t go through your medical or dental plan, you can send an itemized receipt or statement for the expense. It must show:
  • Date of purchase or service
  • Amount you were required to pay
  • Description of the item or service
  • Name of the merchant or provider
• For prescriptions, send your detailed receipt that includes the pharmacy name, patient name, prescription name, date the prescription was filled and amount you paid.
• For dependent care expenses, the dependent care provider must sign the claim form or provide an itemized receipt. It must include the date(s) of service.

Note: If you don’t send an EOB, itemized receipt or statement with your claim, we’ll deny it. We can’t accept a cancelled check, credit card receipt or billing statement that shows “previous balance,” “balance forward,” “estimated,” “filed” or “pending insurance.”

Yes. You can use your FSA funds for over-the-counter (OTC) items, supplies, drugs and medicines (if they’re considered eligible under your plan).

On March 27, 2020, the CARES Act passed and changed the rules for OTC drugs and medicines. You no longer need a prescription from your physician to pay or get reimbursed for OTC drugs and medicines. This change only applies to OTC drugs and medicines you paid for after December 31, 2019.

Yes. You can be reimbursed for eligible health care expenses that you, your spouse and eligible tax dependents incur during the plan year. This is true even if you don’t cover your spouse and dependents on your health plan.