General

An FSA is a special account that lets you set aside money for eligible expenses. The money you put into your FSA is taken out of your paycheck before-tax. That means you'll enjoy a tax savings. You can use the account throughout the year to get reimbursed for eligible health care and dependent day care expenses.

Flexible Spending Account (FSA) Plan Options:

  • Health Care FSA (Health Care FSA)
    Pay for items like prescriptions, copays, eyeglasses, lab fees and deductibles for you, your spouse, and your federal tax dependents. 

  • Day Care FSA (DCFSA)
    Pay for items like daycare, summer camps, and custodial care for dependent adults.

No. Money you put into an FSA is taken out of your salary before federal income taxes, Social Security and Medicare taxes and most state and local taxes are applied.
Generally, contributions you make to your FSA are not subject to federal or social security taxes. In most instances, there are no state taxes taken out either. The amount you may save depends upon:
  • The amount you put into your FSA
  • The tax percentage you would normally pay on that money (tax bracket)
If you elect $2,000 in an FSA, the money is taken out of your check before taxes. That reduces your taxable income by $2,000. If for example, you pay 30 percent in federal, social security, and state taxes you would have a tax savings of 30 percent of the $2,000. In other words, your estimated savings would be $600 on the $2,000 you directed to your FSA. **This example should not be taken as tax advice. See a tax adviser to seek the best advice for your situation.

How much you contribute depends on your individual situation.

It's good to plan ahead. Consider the medical, vision, or pharmacy costs not covered by your health plan. Need dental work? How about contact lenses? Buy Band Aids, contact lens solution or sunscreen throughout the year? Your FSA can help cover those over-the-counter items.

If you have child care or elder care expenses you could open a Day Care FSA.
The IRS limits the amount you can put into a Day Care FSA, up to:

  • $5,000 per year, if you are married and filing a joint return, or if you are a single parent
  • $2,500 per year, if you are married and filing separately
No. You cannot claim an expense reimbursed by your FSA as an itemized deduction on your federal income tax return. You can only deduct IRS-eligible health care expenses your FSA did not reimburse. Look at your situation to decide whether taking a tax deduction is better for you than using a health care FSA. Keep in mind that only medical and dental expenses that exceed 7.5 percent of your adjusted gross income can be deducted on your federal income tax return. Many people do not have enough medical expenses to qualify for this deduction.
FSA dollars are "use-it-or-lose-it" funds. However, you’ll be able to carryover up to $610 of your unused Health Care FSA balance remaining at the end of the current plan year and the funds can be used during the following calendar year. Any unused health care FSA funds over $610 at the end of the year will be forfeited.

Day Care FSA account balances cannot be carried over from year to year. If you have any unused funds at the end of the plan year and do not submit for reimbursement by the end of the run-out period, those funds will be forfeited.
If you have any unused funds at the end of the plan year, you’ll be able to carryover up to $610 of your unused Health Care FSA balance. Day Care FSA must be used by the end of the plan year or those funds will be forfeited.
The IRS considers expenses to be "incurred" at the time you receive medical care or dependent care--not when you are formally billed or actually pay for services. Only eligible expenses you incur within the plan year, are eligible for reimbursement. The exception to this rule is orthodontia – reimbursement is allowed for prepaid expenses, up to the elected amount, regardless of the date of service. The payment must have been made during the benefit period.

When you have an FSA, you do not pay federal taxes, including Social Security tax, on the money you put into it. Social Security benefits are based on your earnings. Because salary reductions will reduce your earnings, your Social Security benefit may be slightly less when you retire or if you become disabled. The impact of your benefit level will depend on a number of factors, including:

  • The length of time between now and when you qualify for Social Security, and
  • Whether your taxable income exceeds the Social Security maximum wage level

Call the Social Security Administration at 1-800-772-1213 for more information.

Under the federal act known as COBRA, in certain situations you have the option to continue participating in the health care FSA. If you choose to continue a health care FSA under COBRA, your contributions must be paid with after-tax dollars. You cannot continue in a Day Care FSA under COBRA.

 

No. You cannot transfer money between accounts.

Federal regulations state that once you have enrolled in an FSA, you cannot change your election amount unless you have a qualifying life event. Here are examples of qualifying life events that allow FSA election changes during the year:

  • Marriage
  • Divorce
  • Birth or adoption of a child
  • Death of a spouse or child
  • Termination of your spouse's employment
  • Commencement of your spouse's employment

No. FSA's do not earn interest.

Yes. Go to https://secure.optumfinancial.com/portal/CC and log on to your account or download the Optum Financial mobile app on your smart phone.

View more information on the mobile app here:

 

Navigate and logon to https://secure.optumfinancial.com/portal/CC

You will also need one of the following:

  • Explanation of Benefits (EOB) - An EOB is sent to you by your health plan. It shows your out-of- pocket expense and the amount your health plan has paid.

  • Itemized bill - A receipt from your health care provider showing the date of service, amount and nature of the expense. The receipt must include the health plan's payment. We cannot accept your receipts until the health plan has paid its portion.

  • Future service dates cannot be submitted. IRS guidelines require services to take place before you can be reimbursed. A reimbursement request for a service that will occur in a subsequent plan year will be returned to you for resubmission in that plan year. If documentation or repayment is not received by the end of the year in which the transaction occurred, you will generally be issued an IRS Form 1099, reporting this amount as income to you.

    Mail or fax your paperwork to:
    Claims Department
    P.O. Box 622317
    Orlando, FL 32862-2317
    Fax: (443) 681-4602

     

    View these instructions to upload a receipt:

     

An IRS form 1099 is used by taxpayers to report financial information to the IRS. Money paid from an FSA for expenses that cannot be proved as FSA-eligible, must be returned to the FSA. If documentation or repayment to your FSA is not received by the end of the year the transaction took place, you may receive an IRS Form 1099, reporting this amount as taxable income to you.

The IRS requires that your spending account elections stay in effect throughout the full plan year. Once your yearly election is made, you cannot change it unless you have a qualifying life event. Here are examples of qualifying life events that allow FSA election changes during the year:

  • Marriage
  • Divorce
  • Birth or adoption of a child
  • Death of a spouse or child
  • Termination of your spouse's employment
  • Commencement of your spouse's employment
Health Care FSA
Examples of eligible health care expenses include:
  • Deductibles, copays and coinsurance
  • Eye exams, eyeglasses and contact lenses
  • LASIK surgery for vision correction
  • Hearing exams and hearing aids
  • Lab fees
  • Chiropractic treatment
  • Dental and orthodontic care
  • Prescription drugs and eligible over-the-counter health care items may also be included. Some over-the-counter health care items may require a prescription to be eligible under the plan

Under IRS rules, health care FSA's are only allowed to reimburse "medical expenses," as defined in section 213(d) of the Internal Revenue Code. Please note, however, that some medical expenses, such as medical insurance, long-term care premiums and long-term care expenses are not reimbursable under a health care FSA.
It's good to consult a tax adviser. IRS Publication 969 is also helpful. It offers guidance on FSA-reimbursable health care costs.

Yes, as long as the expenses are eligible under your Health Care FSA.
Yes. Mileage and parking for medical visits are covered Health Care FSA expenses. You must complete and submit a paper claim form. Enter the total mileage charge as a separate expense on the form. The dates of travel must match the corresponding dates of service. Be sure to check this rate annually. It is subject to change by IRS regulations.
Orthodontia reimbursement is allowed for prepaid expenses, up to the elected amount, regardless of the date of service. The payment must have been made during the benefit period.
Note: When submitting orthodontia information, provide as much information as possible including:
  • Transaction Date
  • Description of Services
  • Name of Patient
  • Payment Amount
  • Location of Service
A health savings account (HSA) is available to an eligible individual who has high deductible health coverage as long as the individual has no other impermissible health coverage. A general purpose FSA is impermissible and renders an individual ineligible to make contributions to an HSA even when it’s their spouse enrolled in a general purpose FSA.
The dependent remains eligible under the Health Care FSA plan until the end of the calendar year. Eligible expenses may continue to be incurred and reimbursed under the Health Care FSA plan through the end of the calendar year. 
If you are enrolled in a State System medical plan, your copays in most cases will automatically validate. If you are enrolled in the PEBTF, Annuitant Health Care Plan (AHCP), or any other outside medical plan, your copays will NOT automatically validate and you will need to provide validation to the vendor.

Day Care FSA

Yes. If the services are necessary in order for you (or, if you are married, you and your spouse) to work, you can include payments made to a babysitter or companion in or outside your home. Expenses will also qualify if you work and your spouse is a full-time student or is mentally or physically incapable of self-care. However, you cannot be reimbursed for payments made to:

  • Your spouse
  • A parent of your qualifying child
  • Your child under age 19, even if that child is not your dependent
  • Any person you claim as a dependent on your tax return

The maximum contribution depends on your tax filing status.

  • If you are married and filing separately, your maximum annual deposit is $2,500.
  • If you are single and head of household, your maximum annual deposit is $5,000.
  • If you are married and filing jointly, your maximum annual deposit is $5,000.
  • If either you or your spouse earn less than $5,000 a year, your maximum annual deposit is equal to the lower of the two incomes.
  • If your spouse is a full-time student or incapable of self-care, your maximum annual deposit is $3,000 a year for one dependent and $5,000 a year for two or more dependents.

Yes, if you are the custodial parent. This is true even if the non-custodial parent claims the dependency exemption for that child. In general, the custodial parent is the parent with whom the child lives for more than 50% of the year. The non-custodial parent may not participate in a Day Care FSA because the IRS takes the position that dependent care expenses are not necessary for the non-custodial parent to be gainfully employed.

You can use the Day Care FSA for elder care expenses so that you (or if you are married, you and your spouse) can work. To claim the expenses:

  • Your parent must qualify as your dependent under the tax rules. Please see IRS Publication 503 at www.irs.gov for specifics.
  • Your parent must be physically or mentally incapable of self-care.
  • Your parent must reside in your home for at least half of the year.
  • Your parent must usually spend at least eight hours a day in your home.

Under IRS guidelines, you can only be reimbursed for dependent care expenses that has already taken place. Also, you can only be reimbursed for the amount that you have already contributed to your Day Care FSA. Unlike the health care FSA, the full amount of your Day Care FSA election is not available January 1.

You can use both a Day Care FSA and claim the federal Child and Dependent Care Credit. You just can't claim the same expenses for both. If you plan to use both, the IRS requires that you subtract the amount you have directed into a spending account from the expenses you use to calculate the tax credit.

The IRS allows you to claim the tax credit for work-related dependent care expenses when you file your federal income tax return. The tax credit amount is calculated by applying a percentage to your total work-related dependent care expenses. The expenses to which this percentage is applied may not exceed $3,000 for one qualifying person or $6,000 for two or more.

If you receive any reimbursements from a Day Care FSA, the IRS requires that you complete Form 2441 and attach it to your federal income tax return. Form 2441 requires the following dependent care provider information:

  • Name
  • Address
  • Social Security Number or tax identification number
  • Amount paid
    If you do not provide this information to the IRS you may lose the tax benefits of the FSA. Visit www.irs.gov for forms, instructions, publications and more information.
FSA Claim Submission and Reimbursement

Log on to https://secure.optumfinancial.com/portal/CC or view our FSA handbook for instructions.

If you have a medical, dental or prescription drug plan:

Submit your Explanation of Benefits (EOB) with your completed claim form. An EOB is typically e-mailed or mailed to you after a claim is processed. If your plan covered at least part of your expense, your EOB is the only documentation needed.

If you do not have a medical, dental or prescription drug plan:

Submit the itemized receipt or statement from your doctor, dentist, pharmacist or other health care professional. The receipt or statement must clearly state your responsibility for the expenses. It must also include:

  • Patient's name
  • Name and address of health care provider
  • Service date(s)
  • Type of service
  • Amount charged
    For resubmissions - label the cover sheet “resubmission” and include the Transaction number (found on your account summary); date of birth, Personnel ID number, and existing claim #.

View this video for instructions on how to file a claim:

 

If you submit a claim for your health care FSA that exceeds the balance, you will be reimbursed up to the full amount of your annual election. That will happen regardless of the amount of money that has been deposited into your account. Contributions will continue throughout the year, and claims will continue to be paid until your total fund amount is gone.

Day Care FSA claims are paid a little differently. If you submit a claim and your balance is less than the amount of the claim, you will only be reimbursed for the amount of money available in your account. The remainder will be reimbursed once money is deposited (via payroll deductions) into your Day Care FSA.

No. According to IRS guidelines, a qualified expense is incurred at the time the service is given, not when you are billed, charged or actually pay for the service.