Flexible Spending General Information
It’s a benefit provided by your employer that lets you set aside
a certain amount of your paycheck into an account before paying income
taxes. Then, during the year, you can use funds in the account to pay
for qualified expenses with the untaxed dollars.
Your biggest benefit is saving on payroll withholding taxes. That’s
because you’ll save $25 to $40 on every $100 you budget to pay for
qualified expenses, depending on the percentage of taxes you pay.
Most qualified expenses are for goods or services that you’ll buy
anyway. They include healthcare costs such as co-pays and doctors’
fees, over-the-counter drugs and prescriptions, and dental and eye care
expenses. Daycare expenses for dependents also qualify.
After you have decided how much money you want to set aside each month,
and how you want to spend it, you have some choices as to how you can
access your money. With MyFlex, some of your healthcare expenses such
as co-pays and deductibles may be automatically reimbursed without filling
out a claim form. For other items, you make the purchase, submit a claim
form, and you will receive a reimbursement check. Or, for your convenience,
you may pay using your MyFlex Visa® debit card if your employer has
chosen the debit card feature. The card automatically pays the exact amount
you need from your account so you won’t have to reach into your
pocket and wait to get repaid.
Your balance and other details are always available online at myflexonline
or by calling the plan administrator, Health Choices, at 800-747-8900.
NO. The entire annual amount you elect for Health Flexible Spending Account
(FSA) is available on the first day and throughout the plan year. However,
only amounts contributed to date are available for dependent care expenses.
The Health FSA is used to pay for expenses not covered by insurance. These
include co-pays, over-the-counter medications, glasses, contacts, orthodontics
and prescription drugs, just to name a few.
YES. You can still set aside money (before taxes are taken out) to budget
and pay for qualified expenses. Remember, a qualified expense paid from
this plan cannot be eligible for reimbursement from another plan.
The more you earn, the more you’ll save. In addition, you’ll
also save social security tax (FICA) with a Dependent Care Benefit (DCB).
So don’t wait until April 15 to take the credit. Now you can save
taxes on every paycheck.
NO. For every dollar you set aside to pay qualified expenses, you save
FICA, federal income tax and (where applicable) state withholding. Your
net take-home pay will increase by the taxes you save. Plus, when you
pay a qualified expense or receive a cash reimbursement, it’s TAX
YES, but only in certain situations. For the Health FSA and Dependent
Care Benefit, you can change your election if you have a change in status
or a change in your employment or the employment of your spouse or a dependent.
Generally, contributions not used during the plan year may not be paid
to you in cash or used in a later year. However, for the Health FSA or
the Dependent Care Benefit, your employer may have elected to allow you
to incur expenses up to 2½ months after the plan year end and use
the remaining plan year balance to reimburse those expenses. Be sure to
carefully budget and calculate your qualified expenses. See your Summary
Plan Description for details.
You may request reimbursement for qualified expenses incurred prior to
your termination. Check your Summary Plan Description for additional rights
provided by your employer’s plan.
Because you may not pay social security tax on the amount of gross pay
you set aside to pay for qualified expenses, your social security benefits
at retirement may be slightly reduced. However, most tax advisors recommend
taking advantage of current tax-savings opportunities like MyFlex. Also,
if disability insurance is paid on a pre-tax basis, any future benefits
you receive will be taxable.