Flexible Spending Account
What is a Flexible Spending Account (FSA)?
If you have medical or dependent care (e.g., day care for young children) expenses, FSAs are a great way to save money. Here’s how they work:
You contribute funds via pre-tax payroll deduction into a medical and/or a dependent care FSA (you decide your contributions, up to the applicable IRS limit- see below for details)
You then use those pre-tax dollars to pay for medical and dependent care expenses that would otherwise be paid for with after-tax dollars.
Because your FSA contributions are never taxed, you get about 30% more buying power than you would from after-tax dollars. In addition to a dependent care FSA, we offer two medical FSA accounts: a traditional medical FSA and a limited purpose FSA (limited to vision and dental expenses only). Per IRS rules, the limited purpose FSA is ONLY available to employees currently enrolled in the Albemarle Choice Plan - our Consumer Driven High Deductible Health Plan with HSA (Health Savings Account).
What does it do for me?
- Reduces your taxable salary. Most participants will realize a tax reduction ranging from .28 to .42 cents for each dollar included in the program.
- Increases your spendable income. The tax reduction you receive is money back in your pocket.
Facts About the Program
- Plan is administered by LD&B.
- The Short Plan Year begins on September 1 and ends on December 31, 2018. The new calendar-based plan year will begin January 1, 2019 and end December 31, 2019.
- No changes can be made during the Plan Year except for a change in family status.
- A family status change is defined as marriage, divorce, death of a spouse or dependent, birth or adoption of a child, employment or termination of employment of your spouse, or a change in your employment status which affects your benefits.
- All regular full-time or part-time employees who are eligible for benefits are eligible to participate in the Flexible Spending Program.
- Since your taxable salary is reduced, less Social Security is paid in. In most cases this very minimal reduction in Social Security wages does not offset the tax savings benefit you will receive. However, if you are within a couple of years of retiring, your best option would be to not participate in this program.
Guidelines for Reimbursement Accounts
- Prior year elections do not carry over. You will need to re-enroll through the Open Enrollment website if you wish to contribute into an FSA for the next plan year.
- The monthly pre-tax deductions begin with your September paycheck. The application asks you for the monthly deduction amount. Determine this by dividing the annual amount to be deducted by the number of paychecks you will receive between September and August; or from the time you join through August 31.
- Claims for reimbursement may be made by using your MasterCard Benny Card (included with plan enrollment) or by submitting claims online or via mail to LD&B. Claims are normally processed within 2-4 days of submission, and reimbursements can be made via check or direct reimbursement into your checking account. Those wishing to sign up for direct reimbursement must submit the direct deposit request form.
Please keep this in mind when estimating your yearly expenses: Any funds over $500 in your medical FSA (traditional or limited purpose) are forfeited; balances under $500 will remain available for the next year (however, you must enroll annually if you want to continue contributing into your FSA).
Limits for the 2019 plan year are:
$2,700 Traditional Medical FSA (NOT available to those choosing to participate in the Consumer Driven medical plan (Albemarle Choice) with HSA)
$2,700 Limited Purpose Medical FSA (ONLY available to those who are participating in the Consumer Driven medical plan (Albemarle Choice) with HSA)
$5,000 Dependent Care
*Remember that FSA contracts DO NOT roll into the next plan year. If you wish to participate in a flexible spending account in a new plan year, you MUST enroll/re-enroll during the Open Enrollment period.*
Health Care Flexible Spending Account
Traditional FSA (not available for those in the Albemarle Choice Consumer Driven High Deductible Plan with HSA (Health Savings Account)):
- The Health Care Flexible Spending Account may be used for qualifying medical and dental expenses that are not otherwise paid by any insurance or any other medical reimbursement program.
- Expenses must be incurred by you, your spouse, or your eligible dependents. Expenses must be incurred and paid during the plan year of September 1 to August 31.
- Maximum reimbursement per plan year = $2,600
- Requests for Reimbursement must include receipts that show the date of service or purchase and the date of payment. Invoices with a balance due are not sufficient, as they do not provide evidence of payment.
- You cannot deduct reimbursed expenses from your income taxes.
Examples of Eligible Medical Expenses:
- Prescription Costs
- Physical Therapy
- Chiropractic Services
- Dental Expenses
- Hearing Aids/Devices
- Vision Care Exams
- Contact Lenses/Glasses
Some over-the-counter medications including cough medicines, antacids, and pain relievers may be reimbursable. The product must be purchased to treat a specific medical condition and you must submit a prescription for these products in order to qualify for reimbursement.
Health Club memberships when they are recommended by a physician to treat a specific medical condition (must also submit a copy of the doctor's recommendation, which will be valid for one plan year).
Examples of Non-Eligible Medical Expenses:
- Non-County Insurance Premiums (County insurance premiums are automatically deducted from your paycheck "pre-tax.")
- Vitamins/Supplements (unless prescribed for specific medical conditions)
- Cosmetic Procedures
- Health Club memberships that are not recommended by a physician
Limited Purpose FSA (ONLY available for those in the Albemarle Choice Consumer Driven High Deductible Plan with HSA (Health Savings Account)):
Examples of Eligible Expenses:
As a general rule, in order to be eligible for reimbursement, services and products must be purchased to treat a specific medical condition. The service or product must be an appropriate treatment for the condition, and that treatment must be its main purpose. Please contact LD&B if you have questions regarding qualifying medical expenses, or visit the IRS website for detailed eligibility information. You may also download the Beneplus Plan Document for additional information.
Dependent Care Flexible Spending Account
- The Dependent Care Flexible Spending Account is designed for employees who need day care for a dependent child or adult to be able to work.
- Your dependent must be under age 13 and eligible to be claimed as a dependent on your federal income tax return OR your dependent must be unable, physically or mentally, to care for him/herself.
- A dependent adult, including a spouse, must be physically or mentally disabled.
- The total payments made in a taxable year under this and any other Dependent Care Plan cannot exceed the lesser of your earned income, or your spouse's earned income (if married), during that taxable year.
- If married, the expenses qualify only if your spouse works outside the home, is actively searching for employment, is a full-time student, or is incapacitated.
- Maximum reimbursement per plan year = $5,000
Examples of Eligible Dependent Care Expenses:
- In-Home Day Care
- Day Care at someone else's home
- Nursery/Pre-School Tuition
- After-School Care
- Adult Day Care
- Dependent Care Centers
- Summer Day Camp (if the cost compares reasonably with other alternatives).
Examples of Non-Eligible Dependent Care Expenses:
- Overnight Camps
- Dependent Care Expenses paid to a person who will be claimed as a dependent on your federal income tax return during the Plan Year.
As a general rule, in order to be eligible for reimbursement, the dependent care expense must be incurred in order for the employee to work. Please contact LD&B if you have questions regarding qualifying dependent care expenses, or visit the IRS website for detailed eligibility information.
The following example may help!
- You make $20,000/year
- You pay $150/month for daycare for dependent children
- You and your family have reimbursable medical expenses of $85/month
- Put $1,800/year into your FSA Dependent Care Account ($150 x 12 months)
- Put $1,020/year into your FSA Health Care Account ($85 x 12 months)
$20,000 Annual Salary
-$1,800 Dependent Care Account
-$1,020 Health Care Account
=$17,180 Taxable Salary
Want to learn more?
Download the FSA enrollment kit in the Documents section on the right side of this page.