Flexible Spending Accounts
Two types of Spending Accounts are offered, Health Care and Dependent Day Care. You can enroll in one or both accounts. If you enroll in the Heath Care Spending Account you will automatically receive a debit card to use for qualifying expenses. There is no cost to the participant for the debit card.
You contribute to these accounts through payroll deduction before paying federal income and Social Security taxes. When you have qualifying expenses, you may withdraw money from your accounts to pay those expenses. This money is not taxed at withdrawal. In other words, you never pay federal income tax or Social Security tax on this money.
Because of the tax advantages, the federal government sets the following restrictions on these accounts:
- You cannot change your contribution amount during a plan year unless you add or lose a family member or you experience a change in job status, and the change you make corresponds to the change that has occurred.
- You forfeit unused amounts at the end of the plan year.
- You can use the accounts only for expenses incurred during the plan year.
- You cannot transfer money between accounts.
- While the same types of expenses that qualify for spending accounts also qualify for the medical tax deduction or child care tax credit on your federal income tax return, you cannot take the deduction or credit for expenses reimbursed through the spending accounts.
The plan year runs from September 1 through August 31.
Booklets and Forms
Health Care Spending Account
You can set up a Health Care Spending Account to reimburse yourself for medical, dental, vision and hearing care expenses not covered by your other benefit plans for yourself or family members. This includes deductibles, coinsurance and copayments as well as expenses not covered by your health and dental plans. You may not use the account to pay premiums for health or dental coverage.
You may contribute from $240 to $2,750 each year to a Health Care Spending Account.
Dependent Day Care Spending Account
You can set up an account to reimburse yourself for the cost of day care for a child or older person who requires care while you (and your spouse if you are married) work. The dependent must share your home at least eight hours a day, be claimed as a dependent on your income tax return and be a child age 12 or younger or an older person who requires care due to a physical or mental disability. The day care provider must be a licensed center or an individual who is not claimed as a dependent on your tax return.
You may contribute up to $5,000 each year to a Dependent Day Care Spending Account. If you are married and file a separate tax return, your maximum contribution is $2,500 a year.