How does an FSA work?
What is an FSA?
A health care flexible spending account (FSA) is an employer-sponsored benefit that allows you to set aside pre-tax dollars to be used for qualified out-of-pocket medical expenses not covered by your health plan.
Who does it cover?
An FSA covers qualified medical expenses for you and your dependents. Please consult your tax professional for more information on those individuals that may qualify as dependents for purposes of the FSA.
What are the benefits of an FSA?
Tax Benefits
Contributions to the FSA are deducted from your paycheck on a pre-tax basis, reducing your taxable income. On average, employees save 30%* of what it would otherwise cost for them to pay for eligible medical expenses.
Funds Availability
There’s no waiting – you’ll have immediate access to your full annual election on the first day of the plan year, regardless of the amount you have actually contributed to date.
Rollover
As an alternative to the traditional “grace period”, plans can allow a rollover of up to $640 of unused FSA funds to the following year. Check to see if your employer offers this option.
*For illustrative purposes only. Savings calculations are based on a federal tax rate of 15%, state tax rate of 5%, and 7.65% FICA.
What expenses are considered eligible?
On average, employees can save 30%* on what it would otherwise cost them to pay for many of the health care items and services they’re already paying for
Common eligible expenses
- Health plan co-pays
- Deductibles
- Co-insurance
- Vision
- Dental care
- Over The Counter (OTC) medications are eligible with a doctor’s prescription. You will need to submit a claim with the receipt for the OTC medicine along with the prescription from your doctor that includes the diagnosis and course of treatment to receive reimbursement
- Acupuncture
- Ambulance
- Artificial Teeth
- Chiropractor
- Contact Lenses
- Prescription Medicines
- Eyeglasses
- Hearing Aids
- Surgery
- Psychiatric Care
- Pregnancy Test
- Weight Loss Programs
- Wheelchair
- Wigs
- X-rays
For a complete list of eligible expenses as defined by the IRS, view IRS publication 502.
*For illustrative purposes only. Savings calculations are based on a federal tax rate of 15%, state tax rate of 5%, and 7.65% FICA.
How can I contribute to my FSA?
Understanding contributions is key to maximizing your account.
Contributions
Your employer determines the amount you may elect to contribute to your FSA up to the IRS maximum of $3,200 for 2024. Your contribution is deducted from your paycheck by your employer throughout the plan year on a pre-tax basis and deposited to your FSA. Your employer may also contribute to your FSA.
Adjusting Contributions
Under IRS rules, elections can only be changed mid-year if you experience a change in status such as marriage, divorce, birth, or death. Check your employer’s plan for more detail.
How do I access my FSA funds?
Payment Options
You are able to pay directly from your account using a benefits debit card, if available. It can be used anywhere debit cards are accepted. You may also use online bill payment to pay for expenses or submit a claim to reimburse yourself for a qualified out-of-pocket expense. If you pay for medical expenses out of pocket, you’ll need to submit a claim for reimbursement on your Health Financial Account portal.
Funds Availability
With an FSA, your entire annual election amount is available on the first day of the plan year even though you have not yet contributed that amount.
Claim Submission Deadlines
You can submit claims for reimbursement at any time during the same plan year that you incur the expense. There is typically a grace period after the end of each year. Check with your employer to determine claim submission deadlines.
How do I enroll into my employer’s FSA program?
Paper Form
Download the FSA Election Form and decide how much you would like to elect for your upcoming plan year. Complete the form and return to your Human Resources department.
Open Enrollment Portal
Ask your Human Resources department or other appointed staff member at your employer to provide access to the open enrollment portal, which allows you to log in to your participant portal and make a paperless election online. Download the open enrollment portal instructions to learn how to navigate the portal. Should you need further assistance contact gente at (973) 995-1000.
