Flexible Spending Account

A Flexible Spending Account (FSA) is an employer owned account that lets you set aside pre-tax dollars (which lowers your taxable income) to pay for eligible out-of-pocket expenses.

There are two types of FSAs that CLASS offers:
1. Healthcare FSA – Can be used to pay eligible medical, dental, orthodontia and vision expenses
2. Dependent Care – Can be used to pay eligible expenses for childcare, eldercare or care for a disabled dependent

Opening Your Accounts
It’s as simple as 1-2-3 to begin contributing to your new Healthcare or Dependent Care FSA:
1. Plan your contributions. Use the Spending Accounts Learn More link on the FSA website for contribution planning assistance.
2. Enroll in Healthcare and/or Dependent Care FSA during your annual enrollment or new hire election period.
3. Review your account through the FSA website soon after the plan year begins and at least monthly thereafter.

Your payroll contributions to your new FSA account will begin with the new benefit year or according to your employer’s plan documentation. The Healthcare plan requires a minimum contribution of $250 and a maximum contribution of $2,000. The Dependent Care maximum contribution is $7,500.

Remember: You must actively re-enroll in your Healthcare and Dependent Care FSA each benefit year.

Learn more about FSAs at healthequity.com/learn/flexible-spending-account.

Plan Your Contributions –
The key to getting the most from your FSA is to maximize your contributions based on the expenses you expect to incur during the benefit year. To plan your contributions, just follow these simple steps:
• Review the list of eligible expenses on the FSA website
• Review your healthcare expenditures from last year
• Write down new eligible expenses you anticipate during the benefit year (new medications, scheduled surgery, changes in insurance coverage, orthodontia, etc.)
• Be sure to include insurance plan deductibles
• If desired, set aside a little extra “padding” for those unexpected expenses. If you don’t incur any unexpected expenses, you can use those funds to purchase contact lenses, prescription sunglasses, an extra pair of eye glasses or an eligible over-the-counter items you may need.
• Then estimate your cost for each of these expenses. The total of your individual estimates is what you should contribute to your FSA.

You may be surprised by how much of your healthcare costs are actually paid out of pocket.

It is also important to remember that an FSA is not a savings account. You must use all of your unused contributions each year or risk losing balance at the end of the benefit year. So, base your contributions on what you expect to be able to spend on eligible expenses during the plan year. If needed, contributions planning assistance can be located on the FSA website.

Note: Your employer determines the minimum and maximum amount you may contribute to the Healthcare FSA. Be sure to verify your employer’s plan limits before enrolling in the plan.

Coverage Eligibility –
You may enroll in your employer’s FSA plan even if you receive insurance coverage through your spouse’s employer. And your FSA funds can be used to cover eligible expenses for all your qualified dependents.

Eligible Expenses –
Because your Healthcare FSA is funded before any taxes are taken from your salary, the Internal Revenue Service determines which expenses are eligible for reimbursement. The list of eligible expenses is extensive and is updated often. If you are uncertain about whether or not an expense qualifies for reimbursement, you should verify its eligibility before incurring the expense. A current list of IRS-approved expenses can be located on the FSA website.

It’s All Yours –
Your employer provides the Flexible Spending Account at no cost to you: no setup fees, no premiums or membership fees, no hidden fees. As a special advantage with the Healthcare FSA, you have immediate access to your entire election amount from the first day of the benefit year, before all your contributions have been made.

A Dependent Care Flexible Spending Account (FSA) helps you to save BIG on the care and supervision of your child. Whether you’re a single parent or you and your spouse work or attend school full-time, providing supervised care for your dependents is essential to your livelihood. Expenses such as daycare, before and after school care or even day camps can amount to significant costs paid directly from your pocket.

SAVE 20%-40% ON YOUR EXPENSES!

Because your FSA contributions are exempt from Federal income tax, Social Security taxes (FICA) and, in most cases, state income tax, you can save 20% to 40% on the child and elder care services you require every working day. While your actual savings are based on your individual tax rate, let’s look at a typical scenario for a family of four at a 30% tax rate:

The Johnson’s both work and place their two young children in daycare each week day. For the two children, they pay $250 per week. Although the actual daycare costs are much higher they take advantage of a Dependent Care FSA account and contribute the maximum amount of $5,000.00. Given their 30% tax rate, the Johnson’s FSA contributions create a savings of $1,500 per year. That’s like getting six free weeks of daycare every year!

With the cost of living rising every day, think about the impact that kind of savings can have on your household budget.

It’s All Yours –
Your employer provides the Flexible Spending Account at no cost to you: no setup fees, no premiums or membership fees, no hidden fees.

Save 20%-40% on your dependent care expenses
• Fund your account with simple paycheck deductions
• Receive reimbursement for expenses with simple claims filing
• Reduce your income tax

Plan Your Contributions –
The key to getting the most from your FSA is to maximize your contributions based on the expenses you expect to incur during the benefit year. To plan your contributions, just follow these simple steps:
• Review the list of eligible expenses on the FSA website
• Review your child or elder expenses from last year.
• Write down any anticipated changes to your dependent care needs during the benefit year (changes in provider cost, placing a new child in daycare, requiring daycare for an elder dependent).
• Estimate your cost for each dependent care item.

The total of your individual estimates is what you should contribute to your Dependent Care FSA. Remember, the more you need to spend on eligible expenses, the greater the value and savings you will gain from your Dependent Care FSA.

It is also important to remember that an FSA is not a savings account. You must use all of your contributions each year or risk losing any unused balance at the end of the benefit plan year. If needed, contribution planning assistance can be located on the FSA website.

Eligible Expenses –
Because your Dependent Care FSA is funded before any taxes are taken from your salary, the Internal Revenue Service determines which expenses are eligible for reimbursement. If you are uncertain about whether or not an expense qualifies for reimbursement, you should verify its eligibility before incurring the expense. A comprehensive list of IRS approved expenses can be located on the FSA website. Some of the eligible expenses include:
• Care at licensed nursery schools or child centers
• Care provided in or outside your home during your working hours
• Before and after-school care
• Day Camps
• Elder Care

Note: The annual regulatory maximum and minimum contributions per household are $7,500 and $500 respectively. Your employer determines the minimum amount you may contribute. Your employer’s plan documents may also define the types of expenses covered under the plan. Be sure to review your employer’s plan documents before enrolling in the plan.