Flexible Spending Information (FSA)
A Flexible Spending Account (FSA) allows you to direct a part of your pay, on a pre-tax basis, into special accounts that can be used throughout the year to reimburse yourself for certain out-of-pocket medical expenses and/or dependent day care expenses. Because your money goes into your reimbursement account before federal and state (where applicable) income taxes are withheld, you pay less in taxes, and ultimately have more disposable income. There are two types of Flexible Spending Accounts: The Medical Expense Account, and the Dependent Day Care Expense Account.
With a FSA, the IRS requires a person to “use-it-or-lose-it” within the plan year (and Grace Period if applicable). "Use it or lose it" means if you do not spend all the money you have elected, it will be forfeited, because under IRS law it cannot be rolled over or refunded to you. Any money that you elect to set aside in a FSA for a given Plan Year may only be used for eligible expenses you incur for services received during that Plan Year. It is very important that you plan carefully when deciding on how much to allot for your FSA.
The Plan Year for flexible spending is September 1st through August 31st. (Galena Park ISD offers a FSA Grace Period. This means you have an additional 2 1/2 months from the end of the plan year to spend the funds in your FSA.)
Frequently Asked Question About Medical Flexible Spending Accounts
Do I need to keep my receipts when I use my FSA card?
YES! Third party documentation could be required any time you use your FSA card or request reimbursement. Therefore, always hold onto your receipt in case further documentation is requested. The receipt must contain the following information:
- Date of service;
- Name and address of service provider or merchant;
- Description of the service or expense provided, and
- Amount charged.
*Please note that non-itemized cash register tapes, credit card receipts and canceled checks alone do not provide proper documentation.
How will I know if I need to submit a receipt?
If a receipt is needed, you will be notified by First Financial Group.
What if I don’t submit my receipts?
You must provide receipts when requested or the transaction can be deemed ineligible, and you will be required to refund the amount of the transaction to your account. If you fail to submit required documentation within 45 days, your FSA card will be deactivated. If you fail to reimburse your account, your employer may withhold the amount of the ineligible expense(s) from your pay or add it to your W-2. However, the IRS may also require you to present documentation to verify your tax return, so hold onto those receipts!
Will the FSA card know which expenses are eligible and which are not?
While the FSA card can identify a healthcare or childcare location based on the Merchant Category Code, it cannot identify the items or services purchased. That is why in some instances you will be required to send in documentation to verify that the FSA card was used to pay for an eligible expense. Always save your receipts!
What happens if I use the FSA card for an ineligible expense?
If you use the FSA card for an ineligible expense, you will be required to reimburse your account for that transaction.
Your Medical Expense Account (Health FSA) may be used to reimburse yourself for eligible medical expenses incurred for yourself, your spouse, your eligible dependents, and/or your adult children who have not reached age 27 before the end of the calendar year.
Eligible medical expenses include deductibles and coinsurance amounts under a group health plan, charges that are in excess of the amount reimbursed under a group health plan, and charges that are not covered under a group health plan such as certain corrective surgeries, vision care, dental care and hearing aids and more. For a list of eligible expense visit FSA Eligible Expenses
The maximum allowable contribution amount for the 2016/2017 plan year is $2,550.
Note: If you or your spouse participate in a qualified High Deductible Health Plan and contribute to a Health Savings Account, you are not eligible to enroll in a medical FSA.
Dependent Care Reimbursement
A Dependent Care Reimbursement Account allows you to pay for the care of child(ren) under age 13, handicapped dependents regardless of age, and elderly parents or for other “qualifying dependent” with “pre-tax” dollars. The maximum amount for Dependent Care Reimbursement for the 2016/2017 plan year is $5,000 for individuals or married couples filing jointly, or $2,500 for married couples filing separately.
You must have made payments for dependent day care to someone you could not claim as a dependent, and if the person you made payments to was your child, he or she must have been age 19 or over by the end of the tax year.
First Financial Administrator (FFA) Benefits Card
The FFGA benefits card is available for the medical FSA and Dependent Care FSA. This card may be used in lieu of cash for qualifed expenses only. It is a signature debit card, and does not require a pin for use. Cards are good for three years from the issue date as long as you participate each consecutive plan year. Cards can be issued to spouses and dependent children (ages 18 to 26) for no additional fee.