A Flexible Spending Account (FSA) is part of the benefit plan offered to you by your employer and allows you to use tax-free dollars to pay for certain medical expenses. There are two types of FSAs:
- Medical - for eligible medical expenses.
- Dependent Care - for eligible dependent care expenses.
To be eligible for an FSA, a participant/employee must work for an employer that offers an FSA. An FSA does not require the participant/employee to be enrolled in a High Deductible Health Plan (HDHP).
The 2020 annual maximum election is $2750 for a Medical FSA and $5000 for a Dependent Care FSA.
Enrolling in an FSA allows you to make tax-free salary contributions to pay for eligible medical and dependent care expenses that are not covered or reimbursed by any other source. FSAs increase your take-home pay by reducing taxable income, making these out-of-pocket expenses more affordable.
You will not pay federal income tax, Social Security tax, and most state taxes (varies by state) on contributions to an FSA.
The amount available for an FSA is your total amount amount elected for the plan year minus any prior payments or reimbursements. You can check your balance at any time by calling our customer service team at (855) 374-6431 or logging into the FBA Account Management Portal using a web browser or our FBA Flex Benefits mobile application.
You can spend your Flexible Spending Account contributions on dental expenses, optical, expenses, pharmacy prescriptions, and eligible medical expenses. For a full list of eligible expenses please see IRS Section 213(d) - Eligible Medical Expenses. Eligible dependent care expenses are governed by IRS Publication 503.
Eligibility of expenses is dictated by the IRS and those guidelines are used by FBA National.
No. Services must be provided on or after your effective date.
If the participant/employee has leftover funds in a Medical FSA after the plan year is over, the employer has the option of:
- Allowing a rollover of up to $500 into the next plan year.
- Allowing a grace period of up to 2 ½ months (75 days) to spend any leftover money in the account, including eligible healthcare expenses incurred after the end of the plan year.
- Allowing a run-out period of up to 3 months (90 days) to file claims for eligible healthcare expenses incurred during the plan year or grace period.
Any unused funds in a Dependent Care FSA will be forfeited at the end of the plan year.
Generally, your election cannot be changed during a plan year unless you experience a Qualified Life Event (QLE) as defined by the IRS. A change in election must be on account of a QLE event, so the election change must be made within the time frame required by your employer after the QLE. For example, you may be permitted to prospectively change an election during a plan year when one of the following changes in status occurs that affects eligibility for coverage:
- Change in your legal marital status (e.g. marriage legal separation, divorce, annulment, death of a spouse).
- Change in number of tax dependents (e.g. birth, adoption, placement for adoption, death)
- Change in a dependent's eligibility for coverage due to the dependent's age, student status, marital status or similar circumstance.
- Change in employment status of employee, spouse, or dependent that affects eligibility for the FSA.
- Change in residence or worksite of employee, spouse, or dependent that affects eligibility for the FSA.
- Change in dependent care service or provider.
No. You must enroll again before the beginning of each new plan year. This gives you a chance to change your election each plan year as your circumstances change.
Your FSA will terminate as of the date your employment terminates. Eligible services provided prior to your date of termination will still be eligible for reimbursement, but services provided after the date of termination will not be eligible unless you are eligible for and elect to continue coverage under COBRA.
No. IRS regulations do not allow this.