Flexible Spending Account for Medical or Dependent Care Expenses
ServiceNet offers the opportunity for employees to set up an account for childcare expenses and/or medical expenses through pre-tax deductions from the employee’s gross pay.
The Flexible Spending Account (FSA) provides employees with the opportunity to pay for medical and/or dependent care expenses using pre-tax dollars. Employees currently enrolled in ServiceNet's FSA were recently mailed a re-enrollment packet. (Currently-enrolled employees who did not receive the packet should contact the HR Department.) Employees not enrolled in the FSA are urged to seriously consider enrolling in this money-saving way to pay for medical and dependent care expenses.
For more information regarding the Medical Expense Reimbursement Account and Dependent Care Reimbursement Account, click on the links below.
· Flexible Spending Account Benefit Program
· Flexible Benefits Election Form
· Direct Deposit Authorization
· Flexible Spending Claim Form
· FSA Overview w/ Eligible Expenses and Medical FSA Expense Estimator
· Dependent Care FSA Overview
· Automatic Dependent Care Reimbursement Process - Reoccuring DCRA Claims can be scheduled for the duration of the plan year. For more information call 1-866-346-5800
The Medical Expense Reimbursement Account
The Flexible Spending Account is designed to help you pay health care expenses incurred during the plan year which are not 100 percent covered or which are not eligible for payment under your health care plan. The amount you choose to set aside in the reimbursement account may be used to pay any health care expense which qualifies as a medical deduction under IRS rules. Health care expenses reimbursed through your Medical Expense Reimbursement Account cannot also be claimed as a deduction for income tax purposes. (This is a deduction which is available when your total medical expenses exceed 7.5% of your adjusted gross income.) Reimbursement is available for medical expenses incurred by you and your family or dependents. Eligible expenses include health plan deductibles, co-payments and any amounts over the maximum your health plan pays. Many expenses not covered by your health plan are allowed, including chiropractic, dental, orthodontia, eye care and hearing expenses, as well as prescriptions and numerous other medical services.
The Dependent Care Reimbursement Account
The Dependent Care Reimbursement Account is designed to help you pay for childcare services (or care for a disabled spouse or dependent) when those services make it possible for you and your spouse to work. Any type of dependent care that you could legally claim if you were filing for a credit on your income taxes is eligible for reimbursement under the Dependent Care Reimbursement Account. To be eligible to use this account, both you and your spouse must be at work during the time your eligible dependent(s) is receiving care. (An eligible dependent is a child under the age of thirteen who qualifies as a dependent who is physically unable to care for him or herself.)
Qualification – You may qualify to use this account if:
· You are a single parent, or
· You have a working spouse, or
· Your spouse is disabled and unable to provide for his or her care, or
· Your spouse is a full-time student for at least five months during the year while you are working.
Tax Considerations – It may not always be to your best advantage to utilize the Dependent Care Reimbursement Account. Because expenses reimbursed form this account may not be used as a Federal income tax credit, you’ll have to determine which approach is best for your particular circumstances. The IRS regulations state that the maximum amount you may be reimbursed in a calendar for Dependent Care is $5,000 (or the taxable income of the lowest paid spouse if less than $5,000). If you are married and filing separately, the maximum is $2,500.
General Information on FSAs
The Importance of Planning – To get the most tax savings from your Flexible Spending Accounts, you should plan your contributions carefully. Once you select the amount you wish to have withdrawn from each paycheck, that amount cannot be changed for the rest of the plan year (which runs from July until the following June). You may wish to be conservative when estimating your expenses for the plan year. IRS regulations require that any money set aside in an FSA that is not used for expenses incurred during the plan year must be forfeited. The unused dollars contributed cannot be returned to you. To avoid losing any money, you should estimate what your eligible expenses will be before you decide how much to contribute - and then commit to a little less. For example, if you know you're going to have health care expenses that are not covered by your medical plan, such as copayments, eye care or dental work, put enough in you Medical Expense Account to cover these expenses. In addition, IRS regulations prohibit transferring funds from one account to another during the plan year. For example, money in the Dependent Care Account cannot be used to pay medical claims, nor can money in the Medical Expense Account be used to pay dependent care expenses. The IRS also does not permit duplication of coverage. Therefore, all applicable medical charges must first be submitted to your standard plan of benefits. Dependent care charges need not. The purpose of the spending account is to cover most out-of-pocket expenses covered under your medical plan and to cover qualified dependent care expenses that could otherwise be eligible for a tax credit.
If Your Needs Change After You Enroll – Once you authorize payroll deductions to be made to a Flexible Spending Account, the IRS prohibits any changes to that election unless you have what is known as a qualifying event. A qualifying event is any one of the following life events:
· You gain or lose a dependent through birth, death, marriage, divorce, separation, adoption or a change in eligibility because of age or dependent status.
· You gain or lose responsibility for a dependent’s medical or dependent care expense due to a court order.
· You gain or lose eligibility for the plan during the plan year.
· If your spouse loses employment, you may enroll in or increase your Medical Expense Account.
· You may also make changes to your Dependent Care Account when there is a change in cost, a change in provider, or a change in the number of hours needed for care.
Should one of these events occur, the IRS also defines what changes you may make to your FSA election. Please contact the Human Resources Department for further information.
It is important to note that this is a summary of current IRS regulations. ServiceNet’s FSA Summary Plan Description details when and if you may change your elections under the plan.