FLEXIBLE SPENDING ACCOUNTS
FREQUENTLY ASKED QUESTIONS
What is a Flexible Spending Account?
Your FSA is a tax-advantaged account to help pay for planned expenses in the upcoming year. A Health FSA covers medical expenses, a Dependent Care Plan covers child care expenses for children 12 years old or younger, and a Transit or Parking plan covers work-related travel expenses. FSA funds are exempt from federal taxes, Social Security (FICA) taxes, and, in many cases, state income taxes.
Who is eligible to enroll in FSA?
Eligibility rules for FSA are determined by your employer. Review your plan document or speak to your HR representative for exact rules. Generally, restrictions may include whether an employee is full-time or has worked with the employer for a certain length of time.
Self-employed individuals are not eligible to participate in FSA.
When does my FSA become effective?
Your FSA becomes effective on the first day of the month after the date you enroll, unless your employer plan specifies otherwise. Contributions to your account begin as soon as administratively possible after you enroll.
Does enrolling in FSA affect my HSA?
If you currently have and are contributing to an HSA, enrolling in an FSA will make you ineligible to continue participating in an HSA. You will still be able to use any HSA moneys you have contributed, but you will not be able to make more contributions to your HSA until your FSA plan is completely ended.
This applies only to your Health FSA--having a dependent, transit, or parking FSA does not impact your HSA eligibility.
How do I contribute to an FSA?
Before the plan year begins, you will have an open enrollment period during which you may choose to have money set aside pre-tax from your paycheck into your FSA. The full amount that you elect to be contributed will be taken from your paycheck throughout the year.
When can I change my contributions?
After making your initial election during the open enrollment period, you cannot change your election outside of a Qualifying Event (QE). You will have 30 days from the date the QE occurred to submit a change in election form. You may not decrease your election below the amount you have already contributed or the amount already claimed for reimbursement.
See your employer plan document for a full list of election change rules and QEs.
How do I use my FSA funds?
You will automatically be issued a debit card that you can use to make purchases directly at the counter. You can also make payments on your own and request reimbursement via check or direct deposit by filling out a claim form either online through your Online Portal or with our paper form.
Be sure to save all receipts and Explanations of Benefits (EOBs) for submission with your reimbursement claim. These are required for all filed claims and may even be needed for credit card transactions.
For Health FSA, your full election amount will be available immediately. For other types of accounts, you can only make claims up to the amount already contributed.
What are Qualified Expenses?
Your Health FSA will only cover qualified expenses, which are defined by the IRS in Publication 502. For medical expenses, these range from hospital visits to bandages and include copays at doctor visits and prescribed medication for you, your spouse, and your dependents.
For a searchable list of eligible expenses, check out FSA Store's Eligible Expenses list.
Dependent Care Expenses are limited to costs to provide day care for children while you are at work. It does not include summer camps or overnight trips, and it cannot be used to reimburse anyone in your immediate family.
Parking and Transit accounts cover the cost of travel and parking for work-related purposes, specifically for your daily commute.
Who qualifies as an eligible dependent?
Your Health FSA covers you, your spouse, dependents that you can claim on your taxes, and adult children who will not turn 27 by the end of the calendar year. It does not cover domestic partners or dependents who earns more than $4,050 in a yera, files a joint return or can be claimed as a dependent on somebody else's return.
Your Dependent Care Plan covers costs for day care for children under the age of 13. Children age 13 or older cannot be covered by this plan.
Parking and Transit plans only cover expenses for yourself.
What happens to any leftover money?
An FSA is a "use-it-or-lose-it" account. Money not used up by the end of the year will expire unless your employer includes either a grace plan or rollover plan. These options are only available for Health FSAs, not for Dependent Care, Parking, or Transit.
A grace plan allows you to continue to use your FSA dollars to cover expenses up to 90 days into the new year. A rollover plan allows you to carry over a certain amount of new funds into a new year, so long as you elect the plan again.
Check your employer's plan document to see if they offer a grace period or rollover option and any rules or restrictions.
SoNM Health/Dependent Care Guide
SoNM Parking/Transit Guide
SoNM Transition Guide