Flexible Spending Accounts
A Flexible Spending Account (FSA) gives you the opportunity to save money on certain medical costs and/or daycare expenses by allowing you to pay for these costs with pre-tax money. Two types of FSA accounts are available and are administered by Combined Services LLC. A Medical FSA allows you to pay for eligible medical expenses (for yourself or your dependents) that are not covered by insurance and a Dependent Care FSA allows you to pay for eligible daycare expenses. To be eligible for a Dependent Care FSA, your dependent must be under age 13 or a handicapped/elderly adult who is unable to care for himself/herself. The daycare must be provided so that you (and your spouse, if married) can work.
What does “pre-tax money” mean and how does an FSA help save money?
Your salary or hourly rate of pay before any taxes are taken out is your gross salary or gross pay. The actual amount of money that is available on your check each pay period is called your net salary or net pay. An FSA works a little like a direct deposit savings account - money is taken out of your gross pay every paycheck before your taxes are calculated and put into a special FSA account. Taking part in the FSA each calendar year will make your net pay lower, but in the long run, can save you money by lowering the amount of taxes that you must pay.
REMEMBER! Unlike a savings account, FSAs are “use-it or lose-it”, so you want to be careful not to put too much money aside each calendar year. You can put up to $2,500 each calendar year into a Medical FSA and/or $5,000 each calendar year into a Dependent Care FSA. The "use it or lose it" provision for Medical FSAs was revised on October 31, 2013. As a result, for the plan year beginning January 1, 2014, Bowdoin's plan was amended to allow an employee to rollover up to $500 of an unused Medical FSA balance into the following plan year. The rollover provision is only available to an employee who is actively employed on the last day of the plan year and who is still making contributions through the end of the plan year. If an employee terminates employment any time during the plan year they will not be eligible for the rollover unless they elect COBRA for the remainder of the year and pay the COBRA contributions through the end of the year. This amendment does not apply to Dependent Care FSAs. Again, if you don’t have enough expenses in the calendar year to claim the entire amount from the FSA account (excluding the $500 amount allowed for a medical FSA rollover), you will forfeit the remaining balance at the end of the year, so be sure to plan carefully.
What can I purchase with my Medical FSA account?
The government only allows the FSA accounts to be used for specific purchases. Here are a few examples of what you can purchase with Medical FSA money:
- Prescription Drug Copayments
- Office Visit Copayments
- Deductible or Coinsurance Amounts
- Eye Glasses/Contact Lenses
- Orthodontic Expenses
To see the full list check out the Combined Services site.
How do I receive reimbursement from my Medical and/or Dependent Care FSA account?
For medical expenses, after you purchase an item or receive services that you are allowed to buy with your FSA you can then submit a receipt along with a claim form to Combined Services and they will send you a check reimbursing you for the cost. Some medical claims may require additional medical documentation. For example, if you use your Medical FSA for orthodontic expenses you must send a copy of the contract between you and your child’s orthodontist that shows the payment schedule along with your 1st claim. You can submit claims at any time during the calendar year, but no later than March 31st for items or services that you received in the previous calendar year.
For dependent care expenses, you must submit a receipt or claim form signed by the child care provider. In addition, you can only submit reimbursement requests for amounts that you have already put in your Dependent Care FSA. For example if your daycare costs are $600 per month, but you have only $400 in your account then you can submit reimbursement for up to $400 that particular month.
Can I have a HSA account and still contribute to a Medical Flexible Spending Account (FSA)?
If you enroll in one of the HSA-qualified high-deductible health plans, you are eligible to make contributions (up to the annual limit of $2500) to a "limited" use FSA. A limited use FSA can only be used for qualified expenses in connection with dental and vision services. if you enroll in the PPO medical plan option, you are eligible to make contributions (up to the annual limit of $2500) to a "full" use FSA. A full use FSA can be used for all qualified expenses in connection with medical, dental and vision services. Qualified medical expenses are detailed in IRS publication 502: Medical and Dental Expenses, http://www.irs.gov/pub/irs-pdf/p502.pdf.
Is there a rollover provision on a "limited" use medical FSA?
Yes, like a full use medical FSA, a limited use FSA allows you to roll over up to $500 of your unspent account balance into the next calendar year. If you are eligible for a full use FSA in one calendar year and then, in the following calendar year you are eligible for a limited use FSA, the rollover goes into a limited use FSA. The same is true in the reverse scenario. The rollover goes into the type of medical FSA (full use or limited use) that you are eligible for in the following calendar year.
Flexible Benefits Department
Combined Services Limited Liability Co.
PO Box 1320
Concord, NH 03302-1320
1-888-227-9745 ext 2040
To learn more about all of the specifics of the Bowdoin FSA visit www.combinedservices.com.