Flexible Spending Account (FSA)–Frequently Asked Questions
Q. Are there different types of flexible spending accounts (FSAs)?
A. Yes. There are three main types of FSAs.
- A health care FSA for qualified medical, dental, vision, or other health care costs, including insurance deductibles, co-payments, and coinsurance
- A dependent care FSA for child, elder, or other dependent care
- A limited purpose FSA (LPFSA) for dental and vision expenses. This is an FSA usually for those who have a health savings account (HSA).
Q. Who owns the FSA?
A. The money is the account holders to use during the plan year. Ultimately your employer owns the account and any unused balance, after the end of the plan year or any run-out period, is forfeited back to your employer.
Q. Does the money in my FSA earn interest?
A. No. The money is simply set aside tax-free to be used for qualified expenses.
Q. How much can be contributed to my FSA?
A. While the IRS doesn’t currently set minimum or maximum annual contributions for health care FSAs, your employer might set limits for account contributions. Beginning January 1, 2013, the IRS will implement an annual contribution limit of $2,500 for health care FSAs.
Maximum contribution limits to a dependent care FSA are set by the IRS rather than the employer. Limits are equal to the amount of earned income of the employee (or spouse, if the spouse earns less) up to $5,000 per family, or $2,500 for a married person filing separately.
Q. Who can put money in my FSA?
A. You and your employer, although employers rarely contribute to employees’ FSAs.
Q. What is an eligible expense?
A. For a health care FSA, deductibles, coinsurance amounts, co-pays, and other expenses that are described in IRS Publication 502—Medical and Dental Expenses, are considered eligible or qualified expenses. See http://www.irs.gov/pub/irs-pdf/p502.pdf for a current complete list. Premiums for health and other insurance aren't eligible expenses.
For a dependent care FSA, expenses must be incurred for the care of eligible members of your family. See the complete list in IRS Publication 503—Child and Dependent Care Expenses. See http://www.irs.gov/pub/irs-pdf/p503.pdf. All expenses must take place within the benefit plan year.
Contact your human resources department for specific information about your plan design.
Q. What happens to the money in my FSA if I leave my job or retire?
A. There may be a brief run-out period when you can continue to submit reimbursements for expenses incurred before you leave your employer, but any remaining balance is forfeited to your employer.
Q. Does the money I have in my FSA roll over from year to year or do I lose the money at the end of the year?
A. Unused funds in your FSA don’t roll over. There may be a brief run-out period when you can continue to submit reimbursements for expenses incurred during the prior plan year. Any remaining balance is forfeited to your employer. Some plans offer a grace period that allows you to both continue incurring expenses and submitting reimbursements after the end of the plan year. After the grace period, any unused balance for the prior plan year goes back to your employer.
Q. Do participants in a dependent care FSA need to report anything on their personal income taxes?
A. Yes. They must identify all persons or organizations that provide care to their dependent(s) by filing IRS Form 2441—Child and Dependent Care Expenses, and submit it with the 1040 Form each tax year.
Q. Who qualifies as an eligible dependent?
A. An eligible dependent is any dependent for which an employee pays a provider to care for him/her while they are at work or looking for work. The dependent must be under the age of 13 or incapable of taking care of themselves, and live in the employee’s home for more than half of the year.
Q. Are orthodontic claims eligible under an FSA?
A. Orthodontic services can be reimbursed as services are provided (i.e. monthly payments), or reimbursement can be made as payments are made as long as the payment is proximate to the actual services being provided (i.e. you can’t get reimbursement for last year’s payments), or as a lump sum provided services beyond the current plan year are not included.
If the entire treatment is paid in one payment, you can request reimbursement during the year the payment was made, even if the actual treatment will continue into the next plan year.
Q. What do I need to submit for my orthodontic claim?
A. You will need to submit a copy of the orthodontics contract to HealthEquity, specifying start date, length of treatment, and total cost.
Q. What is the maximum reimbursement amount from a health and/or dependent care FSA?
A. The entire health care FSA annual election amount may be available at any time throughout the plan year or on a pro-rated basis as set by your employer's plan. Please consult you benefits department on the availability of your health care FSA funds.
The dependent care FSA balance accumulates throughout the year. The annual dependent care FSA amount is only available on as funds are deposited and availble in the account.
Health and/or dependent care FSA balances are always reduced by any reimbursements made.
Q. Can I use the money in my FSA for non-medical expenses?
A. No. Funds can only be used for the qualified medical expenses or for dependent care as outlined in IRS Publication 502—Medical and Dental Expenses and IRS Publication 503—Child and Dependent Care Expenses.
Q. Can I use the money in my FSA to pay for my children’s medical expenses, co-pays, and deductibles?
A. Yes. The money in your FSA can be used to pay for qualified medical expenses of any family member who qualifies as a dependent on your tax return.
Q. My domestic partner is covered on my insurance plan. Can I use my FSA for my domestic partner’s medical expenses?
A. If your domestic partner meets the IRS qualifications of a tax dependent, you can legally use your FSA funds for his or her medical expenses. If your partner doesn’t meet the qualifications, you cannot use your FSA.
Q. Can I use my FSA for eye glasses, contacts, or LASIK surgery?
Q. Can I use my FSA to pay for voluntary cosmetic surgery?
A. No. The FSA can be used for cosmetic surgery only if prescribed by a physician and deemed medically necessary.
Q. How often can I request reimbursements?
A. Reimbursements can be requested as often as qualified expense are incurred. Expenses must be incurred during the plan year and the reimbursement must be requested before the end of the run-out period (or grace period if applicable).
Q. Is there a deadline for submitting requests for reimbursement?
A. Plans typically include a time period, called a run-out period, after the end of the plan year where reimbursement requests for expenses incurred during the plan year can be submitted. Some plans also offer a grace period that extends the time period where expenses can be incurred and reimbursed after the plan year ends. After that, unused funds in the FSA are forfeited to the employer. Consult your benefits department for details.
Q. How quickly will I get reimbursements?
A. Reimbursements are processed within five to seven days after HealthEquity receives a completed reimbursement request form and the necessary documentation.
Q. How can I get my reimbursement?
A. You can elect to receive your reimbursement via direct deposit into your bank account. You may also elect to receive a check by mail.
Q. Where can I get a reimbursement form?
A. Reimbursement forms are available at myhealthequity.com or on your custom member portal.
Q. Can I access my FSA online?
A. Yes. You can see your account balance, claim transactions, and even submit claims and manage your personal information—all online. Simply visit myhealthequity.com or your custom member portal.
Q. How do I contact HealthEquity?
A. You can call HealthEquity Member Services, 24/7/365 at 866.346.5800, or via your dedicated service line listed on your account statement or on your account debit card.