FAQ

An FSA offers tax savings by allowing you to pay for out-of-pocket expenses with pre-tax money. Without an FSA, you would still pay for these expenses, but you would do so using money remaining in your paycheck after federal (and often state and local) taxes are deducted.

*This example illustrates tax savings based on 25% Federal and 7.65% FICA taxes, resulting in a 32.65% discount on eligible expenses paid through an FSA. State and local taxes are not included. Actual savings will vary based on your individual tax situation.

Flexible spending account (FSA) plans enable employees to set aside money, on a pre-tax basis via salary reduction, to pay for certain expenses. Two types of spending accounts are permitted under Section 125: Medical FSA and Dependent Care FSA.

Under a Medical FSA, employees are reimbursed for eligible health care expenses that are not reimbursed by any other plan. Typically, these include deductibles, co-payments, and uninsured expenses, such as dental expenses, eyeglasses or hearing exams as well as any other medically necessary items that are not covered by insurance. PLEASE NOTE: A Medical FSA cannot be used to pay for any type of insurance premiums, including long-term care insurance premiums.

The Dependent Care (Day Care) Flexible Spending Account is used to pay for eligible dependent care expenses such as childcare for children under age 13 or daycare for anyone who you claim as a dependent on your federal tax return who is physically or mentally incapable of self-care so that you (and your spouse, if you are married) can work, look for work, or your spouse can attend school full-time. if your spouse attends school full-time he or she does not need to have earned income. Under Internal Revenue Code section 129 (see sections 129(a)(2)(A) and 129(b)(1)), the maximum amount that can be elected for a Dependent Care FSA is limited to the lesser of:

$5,000 for single individuals or married couples filing joint returns;

$2,500 for married couples filing separate returns,

the employee’s earned income (if less than $5,000/$2,500) or

the spouse’s earned income (if less than $5,000/$2,500).

Your participation in any FSA is completely voluntary, and it is important to remember that unlike other benefits, your FSA election is only effective for one Benefit Period. In other words, you must enroll each year that you choose to participate. If you do not enroll during Open Enrollment, you will not participate in the next Benefit Period, unless you experience a Qualifying Life Event that allows you to make an election outside of Open Enrollment.  gente follows Internal Revenue Service (IRS) guidelines to determine eligible expenses and other requirements for participation in an FSA issued under Sections 105, 125, and 129 of the Internal Revenue Code.

The IRS requires that any unused money left in an employee’s Medical and/or Dependent Care account at the end of the plan year be forfeited to the employer.

The employer can use forfeiture amounts to offset the administrative cost of the FSA program. IRS publications 502 for deductible medical expenses and 503 for deductible child care expenses are available on the IRS website: www.irs.gov

For 2020 the maximum amount the employer can set as a Medical FSA limit is $2,750. Dependent care is a $5,000 annual maximum.

First, you calculate your annual election(s).

When you decide to enroll in the FSA each year during Open Enrollment, you first need to determine how much money you want to elect for your account(s) for the upcoming Benefit Period. The maximum you can elect for a Benefit Period is $5,000 per Dependent Care FSA account, and beginning January 1, 2013, the maximum your employer can allow is $2,750 per Medical FSA.

However, the household limit for a Dependent Care FSA account is $5,000 ($2,500 if you are married, but filing separately). Most people review their current year expenses, think about expenses they may incur in the next plan year, and take into account changes that will occur in the coming year when making their annual elections.

Once you have decided on your annual election, you formally enroll in a Medical and/or Dependent FSA and you specify your annual election(s) that is, how much money you want to have deducted from your pay and deposited into your account(s) during the upcoming year, for you to use during the upcoming Benefit Period.

Next, your annual election(s) is deducted from your pay in equal installments.

After you make your election for the Benefit Period, your employer will deduct your annual election(s) in installments. The installments are spread evenly over the number of pay dates remaining in the Benefit Period. In certain circumstances, you may be approved to have your allotments accelerated so your annual election is taken over a lesser number of pay periods. You can accelerate your allotments during enrollment for reasons such as the two listed below:

If you know you are going on a period of Leave Without Pay, you may prefer to meet your annual election amount prior to beginning your leave.

If you are a teacher, you may prefer to have your allotments match the months in the Benefit Period you are actively teaching.

An HSA is a special type of savings account available to individuals who enroll in a High Deductible Health Plan (HDHP) that allows you to use pre-tax salary dollars to pay for eligible health care expenses. By law, HSAs are only available to members who:

enroll in an HDHP

are not enrolled in Medicare

are not covered by another health plan, or

are not claimed as a dependent on someone else’s Federal Tax return.

An HSA is similar to a Medical FSA in that they are funded with pre-tax salary dollars that can be used for the same type of health care expenses. There is a significant difference between the two. With an HSA, you must be in an HDHP which allows you to rollover funds from year-to-year, therefore you are not at risk of losing unused money. You can be in any type of plan including a HDHP (or no plan) and have a Medical FSA. However, with an HSA, you are no longer eligible for a general purpose Medical FSA because both are used to pay for the same type of expenses.

Regardless of the type of health plan in which you choose to enroll, you may still be eligible for a Dependent Care FSA which allows you to set aside pre-tax salary dollars to pay for child care and elder care for those individuals you can claim on your Federal Tax return.

Whenever you enroll in the program (i.e., if you enroll after Open Enrollment, or if you are a new employee or a newly-eligible employee joining the FSA in mid-year), your annual allotment will be divided by the number of pay periods remaining in the calendar year. For example, if you elect $2,000 and your company has 26 pay periods in the calendar year, your allotment would equal $76.92 per pay period.  You also have the option to accelerate your allotments if you think that you may go into a leave without pay status and/or be paid only during certain months of the year.

The Benefit Period is set by your employer but usually runs from January 1 through December 31. Your employer may elect a grace period of up to 2½ months. This grace period would allow the additional specified time period to incur claims.

Under IRS tax rules, you forfeit any money for which you did not incur an eligible expense under your FSA account(s) during the Benefit Period. This is known as the “use or lose” rule. When you contribute to an FSA, you agree to reduce your salary by a specified amount and your employing agency contributes that amount to an FSA for you.  Since you never received that money, you can’t be taxed on it. If you were to receive the unused amount at the end of the Benefit Period, the IRS would consider this “deferred compensation”. Section 125 of the IRS Code prohibits deferred compensation, thus the “use or lose” rule. The “use or lose” rule is why you should plan carefully, and conservatively, when making your annual FSA election. Also remember that reimbursement for expenses is generally based on when an expense is incurred, not when it is paid.

Important Note: You will FORFEIT any money that you do not use in your account(s) by the end of the Benefit Period. This is known as the “use or lose” rule.  A Grace Period may provide you with an additional 2 1/2 months (usually January 1 to March 15) to incur expenses against your prior year’s account. We encourage you to carefully plan how much money to contribute to your account(s).

A Qualifying Life Event (QLE) is an event defined by the Internal Revenue Service in Section 125 that allows you to change your FSA election. FSA permits all QLEs defined by the IRS.  These QLE’s include:

Change in your legal marital status (i.e., marriage, legal separation, divorce, or death of your spouse)

Change in employment status (for you, your spouse, or dependent) that affects eligibility for health insurance benefits

Change in your number of tax dependents

Birth or date you adopt a child, or placement for adoption

Death of your spouse or dependent

Change in your dependent’s eligibility (for example, your child reaches age 13 where he/she is no longer eligible under a Dependent Care FSA)

Change in your child care/elder care provider or cost or coverage, such as a significant cost increase charged by your current day care provider, or a change in your day care provider. This applies to a Dependent Care FSA only. It does NOT apply to a Medical FSA.

Note: A dependent is anyone you claim on your federal income tax return or someone with whom you jointly file a federal income tax return.

If you or your dependents experience a Qualifying Life Event, you may enroll or change your current election(s) in the FSA Program; however, your requested change must be consistent with the event that prompted the election change. For example, if you adopt a baby, you may want to increase your FSA and/or Dependent Care FSA elections to accommodate the added medical expenses and/or day care costs you may incur for this adopted child. However, in general, you could not decrease your Dependent Care FSA elections for that Qualifying Life Event,. You may wish to decrease your Dependent Care FSA, for example, if your spouse decided to stay home with your child and you no longer had eligible day care costs.

If your requested change is due to the birth or adoption of a child, the change will be retroactive to the child’s date of birth, date of adoption, or placement for adoption, consistent with the requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Additionally, you cannot reduce your Medical FSA, or Dependent Care FSA election(s) below the amount already reimbursed or already in your account.

You can check your account status, including account balance, claim information, last reimbursement, and update your demographic information via the Internet 24-hours-a-day, 7-days-a-week.

Click on the furthest right button at the top menu bar of this screen labeled “Log In”. Enter your User Name and your password for secure online access to your account.

Call 1-866-693-7254 to speak with a customer service representative.

Yes. Your appeal must be delivered to gente within 30 days after receiving the denial notice. If you do not file your appeal within this 30 day period, you lose your right to appeal.

If your claim for benefits is denied, then you have the right to be notified of the denial and to appeal the denial, both within certain time limits. The rules regarding denied claims for benefits under the FSA Plan are discussed below.

When must l receive a decision on my claim?

You are entitled to notification of the decision on your claim within 30 days after gente’s receipt of the claim. This 30-day period may be extended by an additional period of up to 15 days if the extension is necessary due to conditions beyond the control of gente.  gente is required to notify you of the need for the extension and the time by which you will receive a determination on your claim. If the extension is necessary because of your failure to submit the information necessary to decide the claim, then gente will notify you regarding what additional information you are required to submit, and you will be given at least 45 days after such notice to submit the additional information. If you do not submit the additional information, gente will make the decision based on the information that it has.

What information will a notice of denial of a claim contain?

If your claim is denied, the notice that you receive from gente will include the following information:

The specific reason for the denial;

A reference to the specific FSA Plan provision(s) on which the denial is based;

A description of any additional material or information necessary for you to perfect your claim and an explanation of why such material or information is necessary;

A description of the FSA Plan’s review procedures and the time limits applicable to such procedures; and

If gente relied on an internal rule, guideline, protocol, or similar criteria in making its determination, either a copy of the specific rule, guideline, or protocol, or a statement that such a rule, guideline, protocol, or similar criterion was relied upon in making the determination and that a copy of such rule, guideline, protocol, or similar criterion will be provided to you free of charge upon request.

Do l have the right to appeal a denied claim?

Yes, you have the right to appeal gente’s denial of your claim.

What are the requirements of my appeal?

Your appeal must be in writing, must be provided to gente, and must include the following information:

Your name and address;

The fact that you are disputing a denial of a claim or gente’s act or omission;

The date of the notice that gente informed you of the denied claim; and

The reason(s), in clear and concise terms, for disputing the denial of the claim or gente’s act or omission.

You should also include any documentation that you have not already provided to gente.

You cannot change your election unless you experience a Qualifying Life Event. Qualifying Life Events are defined by the Internal Revenue Service in Section 125 as events that allow you to change your FSA election. QLE’s include a change in marital status, number of dependents and many other situations.

No. The total that each family can elect for a Dependent Care (Day Care) FSA must not exceed $5,000 per household ($2,500 each if married and filing separately) in accordance with IRS rules. Therefore, you must ensure that you and your spouse limit your individual elections to total no more than $5,000 combined.

A Dependent Care FSA allows you to be reimbursed on a pre-tax basis for childcare or adult dependent care expenses for qualified dependents that are necessary to allow you or your spouse to work, look for work, or your spouse to attend school full-time. You (and your spouse if you are married) must have earned income during the year, however if your spouse attends school full-time he or she does not have to earn income during the year. Under Internal Revenue Code Section 129 (see sections 129(a)(2)(A) and 129(b)(1)), the maximum amount that can be elected for a Dependent Care FSA is limited to the lesser of:

$5,000 for single individuals or married couples filing joint returns;

$2,500 for married couples filing separate returns,

the employee’s earned income (if less than $5,000/$2,500) or

the spouse’s earned income (if less than $5,000/$2,500).

Unfortunately not, the IRS rules prohibit any refunds without substantiated claims, even on a post-tax basis.

Yes. You may request reimbursement for health care expenses incurred by you, your spouse and/or any of your dependents that you can claim on your tax return. You may also submit claims for eligible health care expenses incurred by your adult child through age 26.

Yes. You may request reimbursement for health care expenses incurred by you, your spouse and/or any of your dependents that you can claim on your tax return. You may also submit claims for eligible health care expenses incurred by your adult child through age 26.

The IRS maximum annual election for the Medical FSA is $2,750 per covered employee, however, your employer may set a lower maximum. There is no household limit for a Medical FSA, so you or your spouse may enroll through the same plan or another plan. Thus, the combined FSA election for a couple may exceed the $2,750 FSA maximum.

If you use a Medical FSA to pay for eligible health care expenses, you cannot deduct those same expenses on your federal income tax return. However, your entire FSA allotment is pre-tax. If you itemize your medical expenses on your tax return, you can only deduct the amount of your total medical expenses that exceed 10% of your Adjusted Gross Income (AGI).

By contrast, when you use a Medical FSA to pay for medical and health care expenses, you receive a tax deduction without having to meet the 10% AGI minimum. The money you allot to an FSA is also exempt from FICA (Social Security and Medicare) taxes, a deduction that is not available on your federal income tax return. If your eligible medical expenses exceed the 10% threshold by a significant amount, you might want to consult with a tax professional to determine which option is best for you.

No! A Health Care FSA is not insurance. It simply pays for your eligible out-of-pocket health care expenses with pre-tax money. First, your claim is generally submitted to your insurance carrier to consider your health care, dental, or vision expenses. You can then submit the remaining out-of-pocket eligible expenses, together with your plan’s Explanation of Benefits (EOB) or detailed statement from your provider, to gente for reimbursement from your Health Care FSA. Your co-payments would not require an Explanation of Benefits but would require a detailed receipt(s). If you have out-of-pocket expenses not covered by your health plan you will need to submit a detailed receipt.

If you use the Prepaid Visa Benny Card you can pay the provider directly. If you file a manual claim, reimbursement will be sent to you by check or direct deposit.

No. The Internal Revenue Code (which governs how all flexible spending arrangements operate) does not permit you to pay insurance premiums from monies allotted to a Medical FSA.

Unlike Dependent Care FSA’s, while the maximum permitted under Federal Law is $5,000 per family, you or your spouse may have another FSA available through another employer plan or the same employer. Thus, the combined Medical FSA allotments for a working couple may exceed the $2,750 Federal maximum per individual employee.

A health care expense is eligible for reimbursement when a covered service is rendered during the Benefit Period in which you are enrolled, such as:

a visit to a health care provider or a provider comes to your home

a prescription is filled by a pharmacist (or the date of service indicated on your receipt if the fill date is not included)

a piece of home medical equipment is delivered to your home

you pay for an eligible over-the-counter product, such as bandages

you pay for an eligible over-the-counter medicine with a prescription

Orthodontia expenses are handled a little differently. Since there is often little direct relationship between when a person visits the orthodontist and when you pay for orthodontia, any orthodontia expenses paid within a Benefit Period are reimbursable regardless of the date of service.

Another exception is home medical equipment (HME) that is rented rather than purchased. If your provider decides that it is more prudent to rent the equipment rather than purchase, you can submit a claim each month for your out-of-pocket expense.

Many of your typical out-of-pocket health care expenses may be reimbursed by a Medical FSA. Some common reimbursable expenses not covered by most health plans are listed below.  All of these items typically meet IRS criteria for a covered medical expense. For more complete listings of eligible medical expenses, please refer to the Healthcare Expense Table, and IRS Publication 502.

Chiropractic services

Co-insurance, co-pay amounts and deductibles

Contact lenses and cleaning solutions

Dental care and procedures not covered under a insurance plan (including crowns, endodontic services, implants, oral surgery, periodontal services and sealants)

Eye surgery not covered under insurance plan (cataract, LASIK, corneal rings, radial keratotomy, etc.)

Eyeglasses not covered under a insurance plan (including prescription sunglasses and over-the-counter reading glasses)

Hearing aids and batteries

Infertility treatments

Orthodontia not covered under a insurance plan

Over-the-counter (OTC) items (including sunscreen, bandages and contact lens solution)

Over-the-counter (OTC) medicines and drugs (including antacids, allergy medicines, cold medicines and pain relievers) when accompanied by a prescription.

Please note: As of January 1, 2011 all OTC medicines/drugs (excluding insulin) will require a physician’s prescription in order to be considered for reimbursement. Note: Insurance premiums, including health insurance, life insurance, long-term care insurance and Temporary Continuation of Coverage, are not eligible for reimbursement.

Some expenses are eligible for reimbursement only when a doctor or other licensed health care practitioner certifies that they are medically necessary. Your doctor’s certification (Letter of Medical Necessity) must indicate your specific medical disorder, the specific treatment needed, how this treatment will alleviate your medical condition, and the length of treatment required.  Examples include:

Air conditioners, central air, heaters, and humidifiers installed in your home for allergy relief

Cosmetic surgery following an accident, disease or other surgery

Home Medical Equipment (e.g., reclining chairs, bed boards, special mattress)

Hydrotherapy

Massage therapy

Water fluoridation units

Weight loss program for treatment of a specific disease (e.g., heart disease), not including cost of food

Wigs for hair loss due to chemotherapy or radiation treatment

gente provides a form Letter of Medical Necessity (located under Forms) that you and your health care provider can use. A personal letter from your provider will also suffice as long as it includes all the information necessary to determine medical necessity. Please note, if the treatment extends beyond the time period listed, you need to submit a new certification/physician letter covering the new time period. You must also submit a new LMN each year that you participate – the length of time cannot be indefinite.

If the letter or note does not contain all of the information listed below, your claim may be denied.

Date

Employee Name and SSN/User ID

Patient Name

Diagnosis (specific medical condition or disorder)

CPT Code assigned to your diagnosis

Specific treatment prescribed by the provider

How the treatment will alleviate the condition

Duration of the treatment

Provider signature, license number, state and telephone number

The following is a list of common medical expenses not eligible for reimbursement:

Insurance premiums, including those for health insurance, dental and/or vision insurance, life insurance, long-term care insurance, and Temporary Continuation of Coverage

Cosmetic surgery or procedures

Exercise and fitness programs for general health, including health club membership dues*

Expenses that have been reimbursed elsewhere

Expenses not incurred during your period of coverage

Fees paid to a health care provider in advance of services being rendered (this includes health maintenance fees but excludes braces)

Personal use items (items ordinarily used for personal, living or family purposes such as household disinfectants)

Physician charges for services that are not direct medical care, such as monthly fees for guaranteed access and quicker appointments (so-called boutique practice or pre-paid physician fees)

* Fees paid for a fitness program may be an eligible expense if prescribed by a physician and substantiated by his or her statement or Letter of Medical Necessity that treatment is necessary to alleviate a medical problem.