FAQ Flex Spending

QUESTIONS AND ANSWERS ABOUT THE FLEXIBLE SPENDING PLAN

What is a Flexible Spending Account (FSA)?     A Flexible Spending Account provides an account where you can set aside a portion of your salary to be reimbursed to you for certain medical, dental, and vision expenses (not paid for by any other benefit plan) and work-related dependent care expenses.

 How does it benefit me?  The money you set aside in your account is deducted from your gross pay BEFORE the following taxes are calculated: Federal Income tax, Social Security, Medicare, State and Local tax.

 How do I elect to participate?  To participate, estimate your expected unreimbursed medical, dental, and child care expenses for the plan year, then complete and sign a Payroll Authorization Form.  The specified amount will be deducted uniformly from each paycheck throughout the Plan Year.

What type of expenses qualify as covered expenses for reimbursement?  

  1. Medical expenses you have incurred and paid which are not reimbursed by any insurance plan.  Treatment or prevention must be prescribed by a physician.
  2. Dental expenses you have incurred and paid which are not covered or reimbursed by any dental program.
  3. Vision care expenses incurred and paid which are not reimbursed by any insurance plan.

How do I file a claim to be reimbursed for medical, dental, vision, and day care expenses?  Complete a Claim Supporting Statement then send it with a copy of the paid receipt to Benefit Administrators, Inc. (BAI).  The receipt should include the date(s) of service, list of service(s) rendered, the name of provider, and the patient’s name.
 

When am I reimbursed for eligible expenses?   Each month, the Plan Administrator processes benefits for eligible expenses submitted in the previous month.

When do I get my money back if I don’t have as many Healthcare expenses as I originally estimated? 

You can carryover up to $500.00 from the current year into the next plan year. If you have more than $500.00 at the end of the plan year and do not have expenses for that amount, it will be forfeited back to your employer.

When do I get my money back if I don’t have as many Day Care expenses as I originally estimated?  You have an additional 2 ½ months after the end of the plan year to pay for non-covered or unreimbursed medical costs or dependent care expenses. If your expenses in any year do not equal your account balance after this extended deadline, any remaining balance is forfeited to the employer. You have 30 days after the end of the extended deadline to submit your receipts for reimbursement.

Can I change my Reimbursement Account payroll deductions once I have started the plan?  You may change your deductions annually.  You can increase, decrease, or stop your deductions during the plan year only if you have a status change, i.e., birth, death, loss of job, marriage, divorce.

 

TAX SAVINGS ILLUSTRATION

A husband and wife both work, and they have two children.  Their combined, annual income is $60,000.00.  They use the Flexible Spending Plan to help pay the premium for dependent medical coverage and orthodontist bills for the children.  With both of them working, they also utilize the plan to pay for necessary child care expenses.  As the chart to the right shows, this couple increases their monthly take-home pay by $178, or $2,136 per year.

 

Without With
Flex Acct Flex Acct
 Total   Monthly Pay       $5,000 $5,000
Less   Insurance Premiums 0 (125)
Less   Medical/Dental Expenses1     0 (200)
Less   Child Care Expenses 2 & 3     0 (400)
Total   Pay Subject to Tax    $5,000 $4,275
Less   Federal Tax* – 3 deps  1   (421) (312)
Less   Medicare & Soc Sec Tx 2    (382) (327)
Less   State3      (153) (143)
Less   City Tax 3        (59) (55)
Less   PA Unemployment Tax4         (3) (3)
Total   Taxes       ($1,019) ($841)
After   Tax Income   $3,981   $3,434
After   Tax Expenses:
Insurance   Premiums (125) 0
Medical/Dental   Expenses (200) 0
Child   Care Expenses (400) 0
After   Tax Expenses   ($725)   $0
Spendable   Income   $3,256 $3,434
Annual   Increase in Take-Home Pay . . . . . . . . .  . .  .$2,136

                                                        

 

1  Medical/Dental Vision – not taxable for Federal, Medicare, Social Security, State and the City of Erie taxes.

2  Child Care – not taxable for Federal, Medicare & Social Security taxes.

3  Child Care – taxable for State, City & PA Unemployment taxes.

4  PA Unemployment Taxes calculated on Gross Wage

*2014 Tax Rates have been used for this example

 

 

 

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