Flexible Spending Account
A Health Care Flexible Spending Account (FSA) is an IRS pre-tax benefit account used to pay for eligible medical, dental, and vision care expenses that aren’t covered by your insurance plan or elsewhere. A Dependent Care account is another IRS a pre-tax benefit account used to pay for dependent care services while you are at work. The money you contribute to a Dependent Care FSA is not subject to payroll taxes, so you end up paying less in taxes and taking home more of your paycheck.
Under this type of account, a "dependent" is a child under 13 years of age (until the day of their 13th birthday) and adult dependents who can't take care of themselves. Both types of FSA accounts reduce your overall tax burden. FSA’s are a smart, simple way to save money while keeping you and your family healthy and protected.
If you are a full-time University benefits-eligible faculty or staff (.80 or higher), you are eligible to enroll in one or both flexible spending accounts.
The University recognizes the need to provide a program that helps you pay for expenses not covered by your health plan and expenses related to dependent care. Flexible spending accounts (FSAs) for health care and/or dependent day care expenses, used properly, can help save you money on these expenses. Benefit Express administers the FSA plan for Loyola University. Once you are enrolled, it is easy to access information and download forms through their website at: www.loyolaexpress.com. Claim forms may be faxed to Benefit Express at 253.793.3766. For additional information, call 877.837.5017.
By participating in either or both of these flex accounts you use tax-free dollars deducted from your paychecks to pay for certain out-of-pocket expenses. The dollars you save are from the following payroll taxes:
- Federal income tax
- State income tax (in most cases)
- Social Security (FICA) tax
Health Care Flexible Spending Account is a pre-tax benefit account used to pay for eligible medical, dental, and vision care expenses that aren’t covered by your insurance plan or elsewhere. It’s a smart, simple way to save money while keeping you and your family healthy and protected. The minimum amount you can contribute per calendar year is $240.00 and the maximum is $2550.00 (subject to change, based on IRS regulations).
Dependent Care Flexible Spending Account is a pre-tax benefit account used to pay for dependent care services, such as preschool, summer day camp, before or after school programs, and child or elder daycare. The minimum amount you can contribute per calendar year is $240.00 and the maximum is $5000.00 (subject to change, based on IRS regulations).
If you are a benefits-eligible new hire, you may participate in either or both the health care and dependent day care flexible spending accounts. You must enroll within your first 31 days of employment. If you do not enroll at this time, the next opportunities to enroll are during the annual benefits open enrollment period, generally held during the fall, or if you experience a qualifying event, such as marriage.
Each year during the benefits open enrollment period, you decide if you want to participate in one or both of the flexible spending accounts for the following year. If you decide to enroll in the program, you also will have to decide how much to contribute to each account. You cannot stop, start or change this election amount during the calendar year unless you experience a qualifying event, as defined by the IRS and the plan. Yearly enrollment is an IRS regulation.
The Benefit Express debit card can simplify the process of paying for eligible health care FSA expenses. You can use the card at qualifying merchant locations, pharmacies and doctors’ offices that accept MasterCard. It is your responsibility to ensure that your FSA MasterCard is used only for qualified health care expenses, and for checking your account balances to make sure you have sufficient funds available.
When you activate your card, it is loaded with the amount you have elected to contribute to your benefit program. As you use the card to pay for items eligible for reimbursement, corresponding deductions will be made from the card balance. We recommend that you keep all receipts for the entire plan year in the event that supporting documentation is requested.
The FSA debit card allows you to pay for eligible expenses at the point of service. Additional benefits include:
- Immediate access to your FSA account; you avoid paying with cash or check.
- Immediate payment of the expense; you avoid waiting for the reimbursement check.
The ease of use at the point of sale reduces the burden of having to pay money out-of-pocket, and eliminating the wait for a reimbursement has proven to be extremely convenient for plan participants.
If you are not using the debit card for some or all expenses, you may submit requests for reimbursement to Benefit Express, along with the required documentation of expenses incurred, after the date you became an eligible participant in the plan. You may choose to receive your reimbursement check through the U.S. mail directed to your home, or you may sign up for automatic direct deposit to your savings or checking account. The request for direct deposit can be accessed through Benefit Express by visiting the website at: www.loyolaexpress.com.
You are required to use the FSA Reimbursement Request Form for submitting all eligible expenses to Benefit Express. Benefit Express forms can be printed from their website along with directions for completion of the form. When submitting it, please furnish documentation of expenses incurred either through an itemized statement from the provider, your explanation of benefits form, or ask your doctor, dentist, or pharmacist to complete and sign in the section titled Provider’s Signature on the form. The form allows you to list several expenses at once. There is a minimum of $25 in expenses before the reimbursement will be processed. Remember to sign the form and attach your supporting documentation. The easiest way to submit the form for reimbursement is by fax at 253.793.3766. Whether the form is faxed or mailed, you should always keep a copy of all information submitted for your records.
There are maximum allowable contributions that limit the salary dollars you may set aside. The health care FSA yearly maximum election is $2,550; the dependent day care yearly maximum election is $5,000 (yearly minimum election is $240). In addition, under the guidelines of this program, the IRS Code specifies that:
- Any money not used for allowable expenses within the calendar year is forfeited and will not be refunded
- Requests for reimbursement of dollars expended within the benefit calendar year must be submitted to Benefit Express along with the required documentation, prior to March 31 of the following year
- Expenses reimbursed through these accounts cannot be claimed as deductions or credits when you file your income tax returns
If a husband and wife both participate in their respective employer's dependent care FSA plans, they may have a combined household—pre-tax contribution of $5,000 for the taxable year but neither may contribute more than the $2,500 per person pre-tax limit (e.g., one cannot contribute $2,000 and the other contribute $3,000).
To avoid forfeiture of your yearly elections, consider carefully the dollar amount to set aside. Review your out-of-pocket expenses for the previous two or three years. Identify how this might change in the current year and elect amounts that will cover realistic expenses. Because this program offers tax savings under IRS Section 125, your unused pre-tax salary reductions cannot be returned to you or rolled-over into future plans’ years. IRS regulations require that all funds be used or forfeited in the plan year the salary reduction was made.
Enroll Every Year—If you are participating in a health care or dependent day care flexible spending account, you must enroll every year. Your current election does not automatically carry over from one year to the next. You may elect to enter, exit or change your FSA election only if you experience one of the following:
- Change in legal marital status (marriage, divorce, death of a spouse);
- Change in number of tax dependents (birth of a child);
- Employment status change for you, your spouse or dependent;
- Dependent satisfies, or ceases to satisfy, eligibility requirements;
- Residence change by you, your spouse or dependent; or
- Change in cost of covered day care.
A change in benefit elections because of a qualifying event can only be made if it is consistent with the change in family or employment status and if the Human Resources department is notified within 31 days of the change. The IRS requires anyone contributing to a dependent day care FSA to complete Form 2441.
- Reducing your taxable income may affect your future Social Security benefits.
- The IRS will not allow you to take the Dependent Care Tax Credit for expenses reimbursed through your FSA account.
- Depending on your personal situation, the Dependent Care Tax Credit may be more advantageous than the pre-tax flexible spending account.
- Consult your tax advisor.
Eligible Expenses and Limitations—The Dependent Day Care Account is designed to pay for the care of children or adults who qualify so that you can work. Eligible expenses include:
- In-home care;
- Care at another’s home;
- Nursery or preschool tuition;
- After-school care;
- Dependent care centers; and
- Summer day camp as long as that cost compares reasonably with other alternatives.
You will need to provide detailed information about your dependent day care provider including: name, address, and Social Security number or tax identification number. Without this information you cannot be reimbursed.
Your dependent day care account has a few important limitations:
- Care for your dependent (who must reside in your home for at least eight hours a day) must be necessary in order for you and your spouse (if married) to work.
- Eligible dependents are defined as children under age 13, or a spouse or legal dependent of any age whom is physically or mentally incapable of self-care.
- Dependent care, such as private babysitting, may not be provided by someone who can be claimed as your dependent for tax purposes, such as an older son or daughter.
- If dependent care services are provided at a day care center, the center must comply with applicable state and local laws and licensing requirements
Eligible expenses and limitations—Many different health care expenses are eligible for reimbursement from your Health Care Flexible Spending Account. Eligible health care expenses are expenses incurred by you and your dependents for “medical care” as defined by IRS code.
Generally, this means an item or service for which you could have claimed a medical care expense deduction on an itemized federal income tax return, for which you have not otherwise been reimbursed or could be reimbursed from insurance or some other source.
You, your spouse, or an eligible dependent must incur these expenses. Only those expenses incurred while you are a participant in the Flexible Spending
Accounts plan are eligible for reimbursement. For example, you may claim reimbursement for the following expenses:
- Health care deductibles
- Expenses not covered by other plans
- Routine physical or dental examinations
- Infertility treatments
- Braces and other orthodontia
- Birth control items
- Vision expenses
- Hearing care expenses