How do I know if a health care FSA is right for me?
You may be responsible for some expenses that are not covered by your medical, dental and/or vision plans. Those include copayments or deductibles; eyeglasses; contact lenses and saline solution; chiropractic treatment; orthodontia and dental work. These are all eligible expenses. Your FSA helps you save money income-tax free to help pay for these expenses.
Starting January 1, 2011 you can no longer use a health care FSA to pay or be reimbursed for over the counter (OTC) drugs or medicines without a prescription. Review a partial list of eligible FSA expenses to see if a health care FSA could help pay for the services you use.
Also, many pharmacy, grocery and department stores can now identify what items are typically FSA eligible items right at the cash register and on your receipts.
Please note:Your employer may have a customized list of eligible health care expenses. Also, the IRS and/or your employer may modify the list of eligible expenses periodically. If you are unsure whether an expense is eligible or not, please contact Customer Care or refer to your employer's FSA plan document.
Contributions to your FSA come out of your paycheck before any taxes are taken out. This means that you don't pay federal income tax, Social Security taxes, and (in most cases) state and local income taxes on the portion of your paycheck you contribute to your FSA.
See the savings for yourself with our FSA Tax Savings Calculator can show your projected tax savings based on the anticipated expenses you input.
Last year's medical and/or dependent care expenses
Any medical or dental costs you foresee that might not be covered under your health care plans (e.g. deductibles, copayments)
Any changes in your family status that might have an impact on your medical/dental or dependent care expenses
Check with your employer to find out what the limits are on how much you can contribute to a health care or dependent care FSA.
If you don?t spend all the money in your FSA by the end of the plan year, you will lose that money. If you?re nervous about the ?use it or lose it? rule, start with a conservative contribution to get comfortable with how the account works.
Generally, your first step is to fill out an FSA claim form, available through this Web site. You can have your reimbursements deposited directly into your checking or savings account by signing up for direct deposit.
All dependent care claims must be submitted using a paper claim form. For health care FSAs, you may have a few other options, depending on your employer's plan:
If you have UnitedHealthcare medical, dental and/or vision coverage and a health care FSA, you may have the option of automatic payment. Automatic payment means that all eligible purchases can be automatically reimbursed to you from your FSA, eliminating the need to submit claims.
You may also receive a Health Care Spending Card Debit MasterCard® to conveniently pay for eligible expenses right at the point of service, such as a doctor's office or pharmacy.
That depends on your individual income and tax filing status. The FSA Calculator Expenses can help you estimate. For most people, savings on health care or dependent care can range between 20 percent and 40 percent because of the tax advantages of an FSA.
If there is unused money in my FSA at the end of the year, do I get to keep it?
No. According to the IRS's "use it or lose it" rule, if you do not use all the money in your FSA for expenses incurred during the plan year, you will forfeit the unused balance. Your unused balance cannot be carried over into the next year. To ease your mind, most people with an FSA will use all of the money in their account. Even if you leave some behind, your tax savings may outweigh the loss.
If you are unsure how much to put into your FSA, be conservative. The FSA Tax Savings Calculator can help you decide how much to set aside.
What happens if I submit a claim for an amount greater than what I have in my FSA at the time? IRS regulations apply.
Health care expenses:
You can submit requests for FSA reimbursement up to the total amount you elected to deposit into your FSA in a plan year. The money doesn't all have to have been deposited for you to be reimbursed. Your pre-tax contributions from your paycheck will continue to go into the FSA to make up the difference, of course. And you will not receive reimbursement for any amount above what you elected to put into your FSA for the plan year.
Dependent care expenses:
This works differently than health care accounts. If your dependent care FSA balance is less than the amount of your claim, you will only be reimbursed for the amount of money available in your account at the time. The remainder will be reimbursed once your future contributions are deposited into your dependent care FSA. This process lets you submit a claim only once and receive funding as it becomes available, rather than be denied payment and be forced to resubmit the claim until it can be paid in full.
Can I change my election or stop contributing money to my spending account at any time throughout the year?
Federal regulations state that once you have designated the contribution amount, you cannot change your decision throughout the year unless you have a valid mid-year change event, including life status change events. Your employer can provide you with a list of mid-year change events that allow you to change your original account contribution.
What are eligible expenses under a dependent care FSA?
You can use your dependent care FSA to pay for daycare services for children under the age of 13; care for other qualifying dependents who are unable to take care of themselves; or live-in help to care for your minor or adult dependents as described above. Search the list of examples of eligible and ineligible expenses. View eligible Dependent care expenses.
For daycare, you can include amounts paid to a babysitter in or outside your home if the services are necessary in order for you (or you and your spouse) to work. Expenses also will qualify for a dependent care FSA if you work and your spouse is a full-time student. Note: The services are not covered if the babysitter is someone you declare as a dependent, such as an older child.
For elder care, you can use your dependent care FSA for eligible day care expenses so that you (or you and your spouse) can work if:
You are responsible for at least 50 percent of the support of an elderly parent or any person living in your residence for more than half the year, who is physically or mentally incapable of self-care.
This person is your legal dependent under federal tax law.
You can also use the dependent care spending account if the elder care is needed because you work and your spouse is a full-time student.