You can set aside money in a flexible spending account (FSA) before taxes are deducted from your pay for certain health and dependent care expenses, lowering your taxable income and increasing your take-home pay.
You may elect to participate in either or both the health care or the dependent care FSA; however, money cannot be transferred between the accounts.
Both FSA benefits are use it or lose it plans. Therefore, you may not recover money left in either account after the plan year and grace period ends.
FSA participation does not continue automatically from year-to-year. You must enroll (or re-enroll) during open enrollment if you wish to participate in the upcoming year.
Cost for participation
Your cost is based on the contribution amounts you elect. In addition to your contribution, you pay a small monthly administrative fee of $1.45.
The annual 2024 flexible spending maximum you may elect is:
- $3,200 for health care
- $5,000 for dependent care (or $2,500 if you are married and filing separate tax returns)
When estimating your dependent care expenses, remember you may not have expenses for weeks of vacation, illness, or other times your dependent receives free care. Please note that dependent care is only for children up to age 13.
You select the amount you want to contribute based on expenses you anticipate through December 31 of the following year. Please estimate carefully because you cannot recover money left in the account at the end of the plan year and grace period. AU's extended grace period allows you until March 15 of the following year to incur eligible expenses and April 30 to submit expenses for reimbursement.
Your contributions are equally divided by the pay periods you have in the calendar year and are deducted before federal income or Social Security taxes are withheld.
The IRS requires that all FSA transactions, even those made using a payment card, need to be verified as eligible expenses. While the substantiation process is performed by Optum Financial, you may be required to submit receipts or documentation for your transaction.
Participation in an FSA is a plan year commitment. During the year, you cannot change the amount you contribute, start participating, or stop making contributions unless you have a qualifying life event. Generally speaking, you cannot lower your contributions.
You can make an election change in the dependent care flexible spending account, but not the health care flexible spending account, due to a change in the cost of dependent care providers.
The health care flexible spending account helps you pay for medical, dental, and vision expenses that are not covered or fully reimbursed by your other benefit plans, such as copayments, coinsurance amounts, deductibles, and amounts above the benefit maximums.
You may submit reimbursement requests for health care expenses regardless of the balance in your account beginning January 1. You will be reimbursed for the entire amount of the eligible expenses up to your annual contribution amount, even before the full contribution has been deducted from your paychecks.
For a complete listing of eligible health care flexible spending expenses, visit optumfinancial.com.
The health care FSA is for eligible heath care expenses for you and all of the dependents you claim on your federal tax return, not just those dependents covered under a university-sponsored medical plan. You are eligible to enroll in the health care FSA even if you are not in a university medical or dental plan.
The dependent care flexible spending account (FSA) reimburses you for eligible dependent care expenses such as day care and elder care, that enable you (and your spouse, if you are married) to work.
If your account currently does not hold sufficient funds to cover the entire reimbursement, you receive a partial payment. Additional reimbursements are issued automatically after contributions from your next paycheck have been added to the account.
Special rules apply to spouses who are full-time students or incapable of self-care. Expenses reimbursed under this plan may not be claimed as a federal tax credit on your tax return. Contact your tax advisor for additional guidance.
For a full listing of eligible dependent care flexible spending expenses, visit optumfinancial.com.
FSA participants automatically receive a payment card that allows direct access to FSA funds for eligible health care expenses. You can use the card when you make eligible health care purchases from most merchants who accept credit or debit cards. Because the card deducts funds directly from your FSA account to pay for services and supplies, it eliminates the wait for reimbursement. The card is offered at no additional charge to you and is not tied to or reported against your credit report.
There are a few rules to know about using your card that will save you time and frustration. Here are some tips:
- When you incur an eligible expense, you may use your FSA payment card to pay the provider right away.
- If you paid with the payment card, be sure to keep copies of all claims and receipts for seven years, as you do with all tax records. Optum Financial or the IRS may request the receipts to audit your account. If Optum Financial requests documentation and it is not provided on their request, your payment card will be put on hold.
- The card works easily with medical office copayments when the charges are standard copayment amounts.
- Generally, Optum Financial may ask for documentation to support non-standard charges or charges that were not processed through a merchant that has a system that verifies the charge's eligibility.
- All flexible spending claims must be submitted by the plan year's grace period.
- If you prefer to pay out-of-pocket and file a claim, visit optumfinancial.com.
- New participants receive an FSA payment card within a few weeks of enrollment.