I. General questions about Flexible Spending Accounts
II. Questions about Flex Account Funds, Account Transactions and Benefit Cards
III. Questions about Dependent Care Accounts
I. General Questions
About Flexible Sending Accounts
What is a Flexible Spending Arrangement (FSA)?
A Flexible Spending Arrangement is a benefit offered to you by your employer under a "Cafeteria Plan" or "Section 125 Plan." A Cafeteria Plan is regulated by the Internal Revenue Service (IRS) tax code. The location of the regulations within the tax code is Section 125, hence the second name.
An FSA allows you to set aside a portion of each pay check, on a pre-tax basis, and then use that money to pay for eligible medical or dependent care expenses. The important thing to remember is you don't pay federal income tax, social security, or state income tax on the funds in your FSA, so you get to keep more of your money.
Generally speaking, Cafeteria Plans have two major components: health or medical Flexible Spending Arrangements and Dependent Care Assistance Programs (DCAPs). The health FSAs are more commonly known as Flexible Spending Accounts or health FSAs, and the DCAPS are typically referred to as Dependent Care Accounts or DCAs.
Why would I want a Flexible Spending Account?
Simply put, an FSA can help you save money! Some people decline the benefit saying they can't afford to have any more money taken out of their pay check. But there's more to it than that. With an FSA the money withheld from your pay check is taken out before taxes. That money is put into in a special account that you can use to pay eligible medical expenses for you and your family.
When you pay medical bills using money from your take-home pay -- that is, money out of your pay check -- you're using "after-tax" dollars. When you set up an FSA you're able to pay those medical bills using "before-tax" or "pre-tax" dollars. By not paying taxes on that money you actually have more money to spend. Think of it like this: having an FSA gives you a discount on those medical bills that's equal to the taxes you would otherwise pay on that money. Top What types of expenses may I pay for with my FSA?
Typically, FSA funds are used to pay for medical expenses that aren't covered by insurance. Examples are copayments at the pharmacy or doctor's office, insurance deductibles, and many over-the-counter medications. It also includes most dental and vision care expenses. (Important: If either you or your spouse participates in a Health Savings Account [HSA] there are restrictions regarding an FSA. Please ask your Human Resources or Savers representative for details.) Please visit our Forms page and download the "List of Eligible and Ineligible FSA Expenses" for an overview of allowed expenses. Please contact Savers if you have questions about specific products or services.
May I use my FSA funds for expenses incurred by my spouse or child?
Absolutely! Eligible medical expenses incurred by either you, your spouse, or your dependents may be paid with the money in your FSA. If you claim a person in your household as a dependent on your federal income tax, then you are allowed to use your FSA money to pay that person's eligible medical expenses. And, they don't have to be covered under your employer's health insurance plan.
How much money can I put in my medical FSA account?
The maximum contribution amount for a medical FSA is set by your employer. Please ask your human resources representative or contact Savers to obtain the maximum amount specified in your employer's plan.
Top What's the "use-it-or-lose-it" rule?
Flexible Spending Accounts are regulated by the IRS tax code. Those regulations stipulate that at the end of the plan year (or at the end of the plan's grace period if your plan includes this option) any money remaining in your FSA account cannot be rolled over. You must "use it or lose it." So, it's important that you plan carefully when deciding on your annual election amount.
What does "Annual Election" mean?
You Annual Election is the total amount you have specified for your account for the full plan year. For health FSA accounts your total annual election can be used from the first day of the plan year. For dependent care accounts the annual election amount is accrued through payroll deductions.
Is there a worksheet to help me calculate my medical FSA annual election?
Yes. Savers feels it's important that you only elect an amount you are comfortable with. So, to help you determine the most appropriate amount for your annual election we offer a worksheet to assist you. Visit our Forms page and download the "FSA Medical / Healthcare New Enrollee Worksheet."
When does Open Enrollment begin?
The Open Enrollment period is the time during which you are able to make changes to your annual election for the next plan year. The Open Enrollment period varies from one employer to another; however, it is typically a month or so prior to the start of the next plan year. Please contact your human resources representative for details regarding your employer's Open Enrollment period.
Top
II. Questions about Flex Account Funds,
Account Transactions and Benefit Cards How soon can I start using the funds in my Flexible Spending Account?
Your medical FSA is "pre-funded" from the first day of the plan year. This means you have access to the full amount of your annual election as soon as the new plan year starts.
How does the money get into my FSA account?
When you sign up for an FSA you specify an annual election amount; this is how much you think you'll spend on eligible medical expenses during the plan year. That amount is divided by the total number of pay periods in the plan year. Then, each pay period your employer withholds that amount from your pay check and puts it into your account. And, the money is withheld on a pre-tax basis. You don't pay taxes on it!
How can I get the available balance in my FSA account?
Logon to the Participant Self-Serve portal 24-hours a day to see your balance, view your transaction history, check your card status, report a lost or stolen card, view and update your contact information, and more! For more information about the logon process please visit the Forms page and download the "Instructions for Setting Up your FSA Online Account." During normal business hours you may also contact Savers and we will gladly provide you with information about your account.
Top
All or part of my transaction was denied when I tried to make a purchase using my benefit card. Why did this happen?
There are several reasons why a benefit card transaction may have been denied. Here are some of the most common problems and suggested resolutions.
Problem: I'm at a retail store that sells eligible medical products. A portion of my purchase was approved but part of the purchase was denied.
Resolution: An Inventory Information Approval System (IIAS) for benefit card accounts was recently enacted as directed by the Internal Revenue Service.
IIAS is designed to allow only healthcare items to be purchased with your benefit card when you shop at non-healthcare locations such as wholesale clubs, discount stores, grocery stores and pharmacies. If you attempt to charge a non-eligible item on the benefit card the item will be denied.
The IIAS helps you sort the eligible items from the ineligible ones when you shop. Prior to IIAS it was necessary for either you or the cashier to separate the items into two groups - eligible items in one group; ineligible items in another - before you checked out, and then ring-up and pay for each group separately. Under the new IIAS system the participating merchant's computer system sorts the items for you during the check-out process. Then, you simply pay for the eligible items with your benefit card and the ineligible ones with another means. (For additional information please see the other IIAS related questions in this FAQ section.)
Problem: Your account may be temporarily inactive due to an unresolved "Pending" or "Ineligible" transaction.
Resolution: Pending transactions require you to submit to Savers a receipt for the service or product purchased. Savers will review the receipt to ensure that the purchase is eligible under IRS guidelines. Receipts should include: (1) the name of the merchant or medical provider, (2) the amount of the transaction, (3) the date of service and (4) a description of the service or product purchased. If a purchased is determined to contain ineligible products or services it will be necessary for you to reimburse your plan for the amount of the expense. Contact Savers for further assistance.
Problem: The transaction amount may have been greater than the available funds in your account.
Resolution: To obtain the balance in your account logon to the Participant Self-Serve portal at any time, or you may contact Savers during normal business hours. You may use the remaining balance in your account by asking the cashier to run your benefits card for the exact amount of the balance, and then paying any remaining portion of the transaction by other means. If you find that you have spent all the funds in your account sooner than you anticipated you may wish to increase your annual election amount during your next open enrollment period. (For more information about the Participant Self-Serve logon process please visit the Forms page and download the "Instructions for Setting Up your FSA Online Account.")
Problem: The benefit card may be expired or it may have been reported as lost or stolen.
Resolution: Sometimes cardholders misplace their benefit card and report it as lost or stolen. When this happens the card is permanently disabled and a replacement card is issued. If the lost card is later found and the cardholder attempts to use it the transaction will be denied. A transaction will also be denied if the card has expired. Please be sure the card you are using is valid and current.
Problem: The merchant may not be eligible to process FSA transactions.
Resolution: FSA cards may only be used for eligible medical or dependent care expenses. An attempt to use the card at a non-participating merchant (such as a convenience store, gas station, clothing store, etc.) will result in a denied transaction. The benefit card should only be used for eligible medical or dependent care expenses.
Top
Can I order a benefit card for my spouse or dependent?
If your employer's FSA plan offers the benefit card option, an extra benefit card on your account is great for your spouse or dependent student in college.
You may order an extra benefit card for your spouse or for a dependent who is claimed on your federal income tax. Visit the Forms page and download the "Dependent Debit Card Request Form."
Do I choose debit or credit at the check-out when I use my benefit card?
The benefits card should always be swiped as a credit card. There is no PIN number associated with the benefit card. Selecting debit at the terminal will result in a denied transaction.
How can I increase my annual contribution?
Generally, your annual election cannot be changed during a plan year unless you experience a qualified change in status as defined by the Internal Revenue Service. Please visit our Forms page and download the "FSA Change in Status Form" for additional information. Please contact Savers with questions about specific circumstances.
How do I file for reimbursement of expenses that I paid without using my benefit card?
Please visit our Forms page and download the appropriate claim form. Detailed filing instructions are included on the respective claim form.
Top How do I send in my receipts? Is there a form I should use?
Please visit our Forms page and download the appropriate claim form. Detailed filing instructions are included on the respective claim form.
My card was lost or stolen. How do I report it and obtain a replacement card?
Lost or stolen cards should be reported as soon as possible by calling Savers at 800-949-0311. You may also report it by logging on to the Participant Self-Serve portal and clicking the "Lost/Stolen Card" link. (For more information about the logon process please visit the Forms page and download the "Instructions for Setting Up your FSA Online Account.")
Typically, replacement cards are mailed directly to the employee's home address on file at Savers. Once a card has been reported as lost or stolen and the replacement card has been issued the replacement card should arrive in a plain, white business envelope within 10 business days.
What do I do with my card once I have used all of my available funds?
Benefit cards are valid for 3 years from date of issue; the expiration date appears on the front of the card. Please don't throw your card away if you are going to re-enroll in your plan. Cards are valid across plan years, so you will be able to use the card again next year when you re-enroll. Approximately 30 days prior to a card's expiration date you should receive a new card in the mail.
Top
What is an IIAS?
Defined by the IRS, an Inventory Information Approval System (IIAS) is designed to allow only healthcare items to be purchased with your benefit card when you shop at non-healthcare locations such as wholesale clubs, discount stores and pharmacies.
IIAS is only applicable at retail establishments that sell healthcare products or services. It is not applicable at doctor's offices, hospitals, dentists and vision care providers.
For more information and to view the SIGIS Merchant List publication, please visit the Special Interest Group for IIAS Standards (SIGIS) web site.
What is the benefit of an IIAS?
It is designed to allow only healthcare items to be purchased with the benefit card. The industry goal is to reduce or eliminate the need to submit receipts and documentation when you purchase healthcare items at participating retailers.
How does my benefit card work at an IIAS retailer?
You are allowed to purchase only healthcare items from certain retailers when you use your card. You may be asked by the retailer at the time of purchase to provide another form of payment to buy the remaining items that have been identified as non-healthcare items by the retailer.
If a retailer such as a wholesale club, discount store or on-line merchant does not have an IIAS in place, your transaction may be denied. The IRS does not require locations such as doctor's offices, labs, hospitals, dental centers, and vision care providers to have an IIAS to be in place. You may continue to use your benefit card at these locations, as allowed by your plan.
Top
III. Questions about Dependent Care Accounts
What is a Dependent Care Account (DCA)?
Offered as a benefit under most employer Cafeteria / Section 125 Plans*, a Dependent Care Account (DCA) allows you to set aside a portion of each paycheck, on a pre-tax basis, and then use that money to pay for eligible dependent care expenses.
*Dependent Care Accounts are optional under a Section 125/Cafeteria Plan. Please contact Savers or ask your human resources representative if a DCA is offered under your plan.
Is a DCA just for child care expenses?
While a DCA typically applies to child care expenses it can also be used for other qualifying individuals. Examples include adult day care for senior citizen dependents, such as parents, or for qualifying individuals who are mentally or physically incapable of caring for themselves. For child care expenses the qualifying child must be under the age of 13. In all cases the qualifying individual for whom the benefit is provided must reside with you.
The expenses must also be for care that enables you (and your spouse, if married) to be able to go to work or to actively seek work. There is an exception to this requirement if your spouse is either a full-time student or disabled.
DCA funds may not be used for summer camps, other than day camps, or for long-term care for parents who live in a care facility or nursing home.
Top How much money can I put in my Dependent Care Account?
The dependent care account has a government imposed maximum contribution of $5,000 per household per year. While married spouses can each elect to have the maximum amount deducted from their paycheck and applied to expenses, at tax time all deductions in excess of $5,000 will be taxed.
Therefore, if you are married and your spouse is also eligible to participate in a DCA plan at his/her place of employment, you should elect no more than the $5,000 per household total between your two dependent care accounts. If you are single the maximum you can elect is $5,000.
Another tax consideration is how much your spouse makes in a year. As stated above, if you're married both spouses must be either working or actively seeking work to qualify for a DCA. While it's rare, in some instances the IRS may require you to consider your DCA benefit as income on your tax return if your annual DCA contribution is greater than your spouse's annual earned income.
Savers strives to provide you with the most complete and thorough information regarding your DCA. However, if you have specific questions regarding how a DCA will affect you or your spouse's tax liabilities and filings, we encourage you to consult with your tax advisor.
How soon can I start using my Dependent Care Account?
Unlike a medical FSA a dependent care account cannot be "pre-funded." In order to receive reimbursement from a DCA the funds must have been deposited into the account. In other words you must accrue the funds in the DCA from each pay cycle. This usually means you will have to pay the first month's child care bill by other means and then file for reimbursement.
Is there a worksheet to help me calculate my DCA annual election?
Yes. Savers offers a DCA Worksheet to assist you in planning your annual election. Please visit our Forms page and download the "FSA Dependent Care / Day Care New Enrollee Worksheet."
Top |
