Making the most of your moneyWhat if you could make your earnings stretch further? A Flexible Spending Account (FSA) can help you to do just that. Baylor University offers you an opportunity to participate in two FSA programs:
- Healthcare FSA. You may contribute a maximum of $2,500 annually to the Healthcare FSA.
- Dependent Care FSA. You may contribute a maximum of $5,000 ($2,500 per spouse if filing separate tax returns) annually to the Dependent Care FSA.
An FSA is a tax-effective, money-saving option that will help you pay for qualified healthcare expenses that are not covered by your medical plan, and for dependent care services necessary to enable you to work.
Once you make your FSA decisions during the annual Open Enrollment period (November 1-30) or upon hire, you will not be able to change your elections until the next Open Enrollment period, UNLESS you experience a qualified family status change, such as a change in marital status, number of dependents or employment status. You will need to notify Human Resources within 30 days of any qualified family status change.
How an FSA works
Prior to enrolling in an FSA account, you should determine the amount of eligible out-of-pocket healthcare and/or dependent care expenses you will incur during the upcoming year. Using this estimate, you can then decide how much you want to contribute to the Healthcare and/or Dependent Care FSA account(s). Your estimations should be conservative so you do not risk forfeiting your funds within the FSA. For your convenience, here is a link to a worksheet to assist you in estimating your annual expenses. To calculate your Health FSA and Dependent Care FSA, you would include only items listed in #1 and #2 on the worksheet.
The annual amount you have elected for healthcare costs is available to you at the beginning of the plan year. The amount available for reimbursement for dependent care is limited to the balance in your account.
If dollars are still available in your Healthcare or Dependent Care Spending Account after December 31, eligible claims will still be reimbursed as long as they have a date of service prior to March 15 of the following year (2-1/2 month grace period). Faculty and staff will have until March 31 to submit claims that were incurred in the previous year or the grace period. For example, you allotted $1000 for your Healthcare FSA, but you only incur $800 in eligible expenses during that year. If you were to incur $200 in medical expenses by March 15 of the following year, you can submit those expenses to be reimbursed with the remaining funds. Funds remaining in your FSA account(s) after March 31st are forfeited.
It is not necessary to specifically request the plan year from which to distribute funds. Eligible expenses incurred during the grace period and approved for reimbursement will be paid from any remaining funds of the previous year and then from the available funds of the current plan year.
Eligible healthcare expenses
Use pre-tax dollars to pay for eligible healthcare expenses, not reimbursed by a medical plan. Common healthcare expenses are eligible for reimbursement from your Healthcare FSA, including deductibles, coinsurance, medical and dental copays and expenses above usual and customary limits, as well as out-of-pocket expenses on prescriptions, orthodontia, vision and hearing care. Certain over-the-counter medicines and drugs may qualify too.
Starting in 2013, there are new rules about the amount ($2,500 limit) that can be contributed to a Healthcare FSA. The $2,500 limit on salary reduction contributions to a health FSA applies on an employee-by-employee basis. Thus, $2,500 (as indexed for inflation) is the maximum salary reduction contribution each employee may make for a plan year, regardless of the number of other individuals (for example, a spouse, dependents, or adult children) whose medical expenses are reimbursable under the employee's health FSA. Consistent with this rule, if each of two spouses is eligible to elect salary reduction contributions to an FSA, each spouse may elect to make salary reduction contributions of up to $2,500 (as indexed for inflation) to his or her health FSA, even if both participate in the same health FSA sponsored by the same employer. Notice 2012-40 provides additional information about these rules.
Note: Effective January 1, 2011, over-the-counter medicines and drugs (other than insulin) are no longer eligible for reimbursement under a Healthcare FSA unless prescribed by a medical practitioner.
If you end your employment with the University or are no longer eligible to participate, you can no longer incur expenses for reimbursement after the separation or ineligibility date. However, if services were received prior to the separation or ineligibility date, you may still file claims until the annual date of March 15 of the next year. If you have funds remaining in your account upon separation, you may continue paying into this account (continuation of coverage; i.e., COBRA) with after tax dollars so that you may incur expenses after the separation date.
Dependent Day Care (DDC)
Pre-tax dollars can be set aside for day care type expenses for eligible children or adults. Expenses are eligible if they are for the care of your dependent children (up to age 13), or a dependent of any age if he or she lives with you and cannot care for himself or herself, such as an elderly parent or disabled child.
The following are some expenses not covered under the Dependent Care Flexible Spending Account:
- 24-hour nursing home expenses
- Day Care with a primary purpose of education or enrichment
- Expenses you expect to claim as a dependent day care tax credit
- Services provided by one of your children under age 19
- Expenses for overnight camps
- Expenses that allow you or your spouse to perform volunteer work
- Transportation, entertainment, food, and clothing expenses
- Expenses incurred during a medical leave longer than one pay period
The Dependent Care Spending Account annual limit is $5,000 for individuals who are married and filing a joint return or persons who are single and filing head of household. If married and filing a separate tax return, the annual limit is $2,500.
If your spouse participates in a Dependent Care Spending Account through another employer and you file a joint return, the total amount both of you contribute cannot exceed $5,000. You are responsible for coordinating your contributions to a Dependent Care Spending Account with your spouse so that the $5,000 limit is not exceeded.
An expense cannot be reimbursed until the service has been fully incurred. You may only be reimbursed up to the amount actually contributed to your Dependent Care Spending Account for the plan year less any prior reimbursements.
The Internal Revenue Code, section 129, does not allow participating in the Dependent Care FSA while on medical leave. DDC expenses incurred during a medical leave are not eligible for reimbursement. Since your Dependent Care status has changed as a result of medical leave, you may elect to change your election for the balance of the year.
If you end your employment with the University or are no longer eligible to participate, continuation of the FSA does not apply to Dependent Day Care.
Whether the Dependent Care Account or the tax credit is more advantageous to you depends on your personal tax situation. Unfortunately, we cannot provide tax advice to you. You should consult your tax advisor. Another resource to check is the IRS publications.
Submitting an FSA Claim
WageWorks administers both the Healthcare and Dependent Care Flexible Spending Accounts. WageWorks' easy-to-use-and-understand claim forms enable you to submit claims online via the WageWorks' website for the fastest (and most secure) method, or by email, mail, or fax, and get reimbursed quickly. Click on the appropriate claim form you require below and it will open up in any web browser. Just scan and email or print it out to mail or fax it in, along with the appropriate receipts, and you're done!MyFlexOnline
Mail: take care by WageWorks, P.O. Box 14054, Lexington KY 40512
Direct Deposit: Reimbursements are paid faster by electing direct deposit. To begin direct deposit, please complete a WageWorks Direct Deposit Authorization Form.
If you have access to your FSA using the take care Card, you won't have to pay for qualified expenses out of your personal funds and then wait for a reimbursement. And, with the card, there's less paperwork. For example, when the card is swiped for a co-pay at the doctor, pharmacy or at Certified No Receipt Retailers, no additional paperwork is required. Keep in mind that you should always save itemized bills, explanations of benefits, and/or receipts for FSA purchases made with your Card. You may be asked to submit those documents to verify that your expenses comply with IRS guidelines.
WageWorks Customer Service