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 yours to use during the plan year. Ultimately though, your employer owns the account and any unused balances after the end of the plan year or a run-out period are 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 employers might. And in 2013, the IRS will implement an annual contribution limit of $2,500 for health care FSAs.

Unlike health care FSA maximums, the maximum contribution to a dependent care FSA is set by the IRS rather than the employer. It is 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 www.irs.gov/publications/p502/index.html 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/publications/p503/index.html.

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, but any balance after that 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 plan year. Any balance after that 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 for a time. After that, any unused balance for the previous 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 Form 1040 each 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. The dependent must be under the age of 13 or incapable of taking care of himself/herself, and live in the employee’s home for more than half of the year.

Q. Are orthodontics 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 orthodontics claim?
A. You will need to submit a copy of the orthodontics contract 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. Please consult your human resource 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 a pro-rated basis.

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. See www.irs.gov/publications/p502/index.html for a current complete list.

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 can’t.

Q. Can I use my FSA for eye glasses, contacts, or LASIK surgery?
A. Yes.

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 as being medically necessary.

Q. How often can I request reimbursements?
A. Reimbursements can be requested as often as a qualified expense is incurred, as long as the expense is incurred during the plan year and the reimbursement requested before the end of the run-out period (or grace period if applicable).

Q. Is there a deadline for submitting requests?
A. Plans typically include a time after the end of the plan year to requests for expenses incurred during the plan year (known as a run-out period) or expenses incurred up to the end of the extension (known as a grace period) After that, unused dollars are forfeited. Consult your HR department for details.

Q. How quickly will I get reimbursements?
A. Reimbursements may be made 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 get your reimbursement by check or direct deposit.

Q. Where can I get a reimbursement form?
A. Reimbursement forms are available at www.myhealthequity.com or your specific member portal.

Q. Can I access my FSA online?
A. Yes. You may see your account balance, claim transactions, and more online. You can also request reimbursements and manage your personal information. Simply visit www.myhealthequity.com or your specific member portal.

Q. How do I contact HealthEquity?
A. You can call HealthEquity Member Services 24/7/365 at 866.346.5800 or your dedicated service line.