A Flexible Spending Account allows you to have pre-tax payroll deductions for health care related expenses that are not covered or reimbursed by insurance. Childcare/Eldercare expenses are also covered under our Flexible Spending Account. (DOWNLOAD THE APPLICATION FORM - CLICK HERE) You can set aside up to $3,200 for health care as well as $5,000 for childcare/eldercare.
Here’s an example of how the plan works. If you have child care expenses of $3,000.00 per year, and unreimbursed medical, dental, or vision expenses of $1,000.00 per year, you can enroll in the Flexible Spending Account Program. You may also use this account to buy many over the counter products or common drugstore items - many of which now require a doctor's note or prescription. You will sign for $4,000 to be deducted equally from your paychecks for the coming calendar year - $4,000 divided by 24 paychecks is $167 per check. This deduction is pre-tax.
To have $4,000 to spend you will have to earn $5,556 if you are in the 28% tax bracket. Not so if you enroll in the Flex 125 plan. To have $4,000 you will only have to earn $4,000!!!! Save close to $1600 in the example above on expenses you are going to have anyway.
The enrollment period for our Flexible Spending Account Program is in the first two weeks of December.. This enrollment period also applies to those enrolled in the FSA for the current tax year who wish to re-enroll.
One drawback of the program is that any money that remains in your Flexible Spending Account at the end of a plan year will be forfeited. If you are approaching retirement, remember that all funds set aside in your Flexible Spending Account must be expended before your actual retirement date. We are allowed to carry over $640 into the next year - but it is still a good idea to be conservative when determining how much to deduct.
Most people do not take advantage of these savings even though for medical expenses you get something that looks like a debit card. Use it instead of paying up front and getting reimbursed.
Enrollment information and forms were sent via email from Lindsay Smith. Lindsay can be contacted at 320-2045 or by email lin_smith@chuh.org. Sign up and save money!
Additional Resources
Summary topics of healthcare expenses that are covered
Exhaustive list of items that can be reimbursed using a 125 plan.
Link to IRS Publication 502 with explanations of the healthcare expenses used in FSAs - look under "What are medical expenses?"