Flexible Spending Accounts (FSA) - WageWorks

Introduction

A Flexible Spending Account (FSA) is a program that permits benefits-eligible faculty and staff to pay for unreimbursed eligible medical, dental, vision care, and/or dependent care expenses with pre-tax dollars through payroll deduction. The money deposited into these accounts is not taxed at the time of contribution, and remains tax-free when it is withdrawn as reimbursement for eligible expenses. If an employee wishes to take advantage of a FSA each year, they must renew the account during the open enrollment period.

Employees can enroll in both Flexible Spending Accounts: medical/dental and/or dependent child/elder care. Dollars deposited in these accounts are kept separate and cannot be transferred from one account to the other. Both accounts are administered by WageWorks and if a participating employee registers on the WageWorks website they can track the activity of their account online.

Once a FSA account has been opened, it cannot be changed. The employee is committed to that decision for the plan year. The only exception is when the employee has a qualifying Change in Status.

Important Deadlines for Flexible Spending Accounts

Medical/Dental FSA - incur eligible expenses for current tax year until March 15th of the following tax year.
Example: 2012 FSA can incur costs from January 1st – March 15, 2013.
Submit claims by May 31st of following year.
Example: 2012 FSA claims must be submitted by May 31, 2013.

Dependent Care FSA – incur eligible expenses for current tax year until end of current tax year, December 31st.
Example: 2012 FSA incurs costs from January 1st  – December 31st.
Submit claims by March 31st of following year.
Example: 2012 FSA claims must be submitted by March 31, 2013.

**Under government regulations, unused dollars after the deadlines will be forfeited.**

Medical/Dental Care Flexible Spending Account

(Can incur costs until March 15th of following calendar year. Request reimbursement by May 31st)

This account can be used to pay eligible medical, vision, and dental expenses including deductibles and co-payments not covered under any other plan.

Minimum Deposit per Pay Period:  

$1.00

Maximum Annual Deposit:

$2,500.00 (effective January 1, 2013)

Eligible Expenses for Medical/Dental FSA include, but are not limited to (please reference IRS publication 502 for full listing of eligible expenses):

  • Acupuncture - Performed by a licensed practitioner 
  • Alcoholism or Drug Dependency - Payment to a treatment center 
  • Ambulance 
  • Analysis - Psychotherapy by a licensed practitioner 
  • Birth control pills 
  • Chiropractors - Services within scope of license 
  • Contact lenses, including contact lens solution 
  • Deductibles and Copayments - Balance not paid by other medical coverage 
  • Dental fees, x-rays, fillings, braces, extractions, false teeth, treatments, orthodontic care, etc. 
  • Doctors' fees 
  • Eyeglasses, lenses, frames, exams 
  • Hearing aid 
  • Learning Disability - Tutoring by licensed school or therapist for child with severe learning disability 
  • Medicines - Prescribed and legally obtained drugs and medicines 
  • Nursing Home - Confinement for treatment of illness or injury 
  • Optometrist - Services within scope of license 
  • Oxygen 
  • Physical Therapy 
  • Smoking cessation 
  • Vaccinations and Immunizations 
  • Vitamins and Mineral Supplements - Prescribed for treatment of illness

Dependent Child/Elder Care Flexible Spending Account

(incur costs through December 31st each year. Request reimbursement by March 31st of the following year)

This account is for the purpose of paying for eligible dependent/elder care expenses (such as child or parental care) that enables you to work.

Minimum Annual Deposit:

$100

Maximum Annual Deposit: 

$5,000

Dependent care expenses are eligible for reimbursement if they meet the following criteria (please reference IRS Publication 503 for full description of eligible expenses):

The annual amount submitted for reimbursement does not exceed the lesser of your income or your spouses income
The expenses are necessary to enable you to work
Your dependent is under age 13 or is physically or mentally incapable of caring for him/herself
Your dependent is eligible to be claimed as a dependent on your Federal Income Tax Return
Your dependent resides in your home for at least eight(8) hours per day
Your payments are not made to a person you claim as a dependent
If the services are provided by a dependent care center that provides care for more than six individuals (other than a resident of the facility), the center must comply with all state and local laws
NOTE: When filing Federal Income Tax Return you will be required to supply the name, address and taxpayer identification number of the dependent care provider.

Dependent Care Tax Credit vs. Dependent / Elder Care FSA - Certain dependent care expenses qualify for a tax credit on the employee's federal income tax return. Most of these expenses can also be used in conjunction with a tax-free dependent/elder care FSA. Employees are not permitted to claim the same expenses in both places. It is a good idea to weigh the advantages of both tax savings plans in detail before determining which option is most advantageous.

How to Use Funds in These Accounts

Medical/Dental Care Flexible Spending Account

When you enroll in a FSA your annual contributions are credited to an account in your name. You will receive a debit card for the account which you can use to pay for eligible health care expenses. Because the debit card is issued with the total annual balance selected at the time of enrollment, that total amount will be available even if you have not contributed the full amount to your FSA.

In the event the card is not accepted by your provider or if you are unable to use it because the merchant is not IRS approved (see WageWorks website for approved merchants) you would pay for the eligible expense out-of-pocket and submit a Pay Me Back Form (a.k.a. "WageWorks Health Care Claim Form," available on Forms page) with appropriately documented receipts directly to Wage Works.

Important: Always keep receipts. WageWorks may request the receipts to verify an expense. An appropriately documented receipt will be required including: Patient Name, Provider Name, Date of Service, Type of Service and the Net Amount Owed by the Account holder.

Dependent Care Flexible Spending Account

Dependent Care funds are accessed in two ways:

1. As eligible expenses arise over the course of the year, employees pay for them, submit a Pay Me Back Form (a.k.a. "WageWorks Health Care Claim Form," available on Forms page) with receipts directly to Wage Works.

OR

2. When you enroll in a Dependent Care FSA, you will be able to take advantage of the re-occurring payment option, where checks are mailed directly to your caregiver. Information and enrollment for this method of payment is available at the WageWorks website.  If the Dependent Care FSA does not contain sufficient funds to cover the expenses, reimbursement will be made up to the current account balance. The outstanding reimbursement will be made at a later date.

  • Minimum reimbursement: $25, except in March, when the last reimbursement for the previous calendar year is made 
  • Reimbursement payments made by check may take up to 2 weeks

Reimbursement through Direct Deposit

Reimbursements from your Flexible Spending Account can now be direct deposited into your bank account. Once the request for reimbursement is processed it takes approximately 72 hours for the direct deposit to complete. To sign up, go to the WageWorks website. Register as a Participant by setting up a user name and password. Once signed in, go to Edit My Profile and Reimbursement Payments where you can choose to Make Reimbursement Payments by Direct Deposit.

Additional information is available at the WageWorks website or by calling Customer Service at: 877-924-3967 (6:00am to 5:00pm PST).