Flexible Spending Accounts
INCREASE YOUR TAKE HOME PAY
WITH A FLEXIBLE SPENDING ACCOUNT (FSA)
What is a Flexible Spending Account (FSA)?
By selecting to redirect a portion of your salary to a Health and/or Dependent Care Flexible Spending Account (FSA), you essentially “bank” your money TAX-FREE. The UNTAXED money can be used to pay for all those Health and/or Dependent Care expenses that eat away at your take home pay. Expenses for you and your family members include, but are not limited to, the medical plan co-pays and deductibles, dental plan deductibles and visit fees, prescription co-pays, over-the-counter medication costs (if provided through a doctor’s prescription), contact lenses, chiropractic care, acupuncture, hearing devices, insurance deductibles, child care or elder care.
HOW A FLEXIBLE SPENDING ACCOUNT WORKS
Faculty and staff may enroll in one or both Flexible Spending Accounts. You must re-enroll each year that you wish to participate. You decide how much money to put into your account by estimating how much you expect your Health and/or Dependent Care expenses to be during the calendar year. The amount is then deducted from your paycheck in equal installments throughout the year, before taxes are withheld, and deposited into your account(s). Login to Employee Online and select the “What If” option to estimate the amount of tax savings you may receive by enrolling in Flexible Spending Accounts.
Enrollment information will be sent to our vendor, ADP. If you are new to the Health Care Flexible Spending Program, ADP will send you a debit card that can be used at the doctor’s office, pharmacy, hospital, etc. Use of the debit card is not mandatory. Current participants will continue to use the cards that were previously issued. Reimbursements for Daycare and Health Care Flexible Spending Accounts will be processed by ADP as a check or you may wish to enroll in their direct deposit program. ADP’s website is https://myspendingaccount.adp.com/. Login to review your account balance, check on your claim status, download forms or submit a claim and upload receipts.
A LITTLE PLANNING GOES A LONG WAY
While Flexible Spending Accounts offer many advantages, there are a few key points to keep in mind to make sure your account(s) work for you:
- Once you sign up for one or both accounts, you cannot change or stop your contributions unless you experience a qualified family status change, such as marriage, divorce, the birth or adoption of a child, or a change in employment status of you or your spouse.
- When you use an account, you cannot claim the same expenses on your federal income tax return. In some cases, you may be able to receive a tax credit for certain dependent care expenses that are more advantageous than the tax free account reimbursement.
- The Flexible Spending Account cannot be used for domestic partner related expenses.
- You have until March 30, 2016 to submit claims for reimbursement of: 1) Health related expenses incurred between January 1, 2015 and March 15, 2016, or 2) Dependent care expenses incurred during calendar year 2015. According to IRS rules, any money left in your account is forfeited.
- The Flexible Spending Account is a once a year election that must be made prior to the start of a new tax year.
HOW TO ENROLL IN THE PLAN
To participate in the tax-free Flexible Spending Account program, complete the attached Union College Health/Dependent Care Flexible Spending Account form and return it to Human Resources.
The minimum contribution for a health care account is $1 per pay period and the maximum contribution is $2,550 per year.
The minimum contribution for a dependent care account is $100 per year and the maximum contribution is $5,000 per year. Expenses must be for dependents under the age of 13.
Health Care Flex Spending Account
Your un-reimbursed health care expenses in each calendar year can be paid with pre tax dollars when you direct your estimated out-of-pocket medical expenses to the Health Care Flexible Spending Account. Health care expenses which can be paid with before-tax dollars include: health and dental insurance plan deductibles, co-payments for certain health and dental treatment, expenses not covered under the health and dental plans, eye and vision care, hearing examinations, and hearing aids.
When you enroll, estimate the amount to be withheld during the calendar year. If you are unable to use the Debit Card for your medical expenses, you can complete a claim form and submit originals of the bills or receipts to ADP through your account via web. You will be reimbursed for the amount of the unpaid claims. However, you ca\not receive more money than the total you elect to deposit into the Health Care Flex Spending Account for that year.
You may allocate up to $2,500 each calendar year to the Health Care Flex Spending Account. The Internal Revenue Service guidelines require that any amounts not spent from the Health Care Flex Spending Account must be forfeited, therefore you should estimate your expenses carefully. Link to: Enrollment Form
Dependent Care Flex Spending Account
You can set up a pre tax Dependent Care Flex Spending Account to pay for the costs of caring for children or other eligible dependents in nursery schools, day care centers, or private homes. When you enroll, estimate the amount of expense that will be incurred in the calendar year. When you incur the expense, you submit a claim form together with proof of expense through your account with ADP vis web and you will be reimbursed.
You may allocate up to $5,000 each calendar year to the Dependent Care Reimbursement Account. Internal Revenue Service guidelines require that any amounts not spent from the Dependent Care Flex Spending Account must be forfeited.
You should be aware that instead of participating in the Dependent Care Flex Spending Account you may elect a tax credit on your income tax return for a portion of certain allowable expenses. Depending on the earned income of you and your spouse for the calendar year, it may be to your advantage to claim the tax credit. You may not take the tax credit on reimbursed dollars. Tax credit (up to IRS limits) may be taken on expenses that exceed reimbursed expenses. Link to: Enrollment Form
For more information about this or any other benefits, contact Human Resources at ext.6108.