What You Need to Know

Want to save money on health care expenses? How about day care? Of course you do! Flexible Spending Accounts (FSAs) let you pay eligible out-of-pocket health care and dependent care expenses with pre-tax funds—meaning you save!

Understanding the Flexible Spending Accounts

FSAs are tax-advantaged accounts you use to pay for eligible medical, prescription drug, dental, vision, hearing, and dependent day care expenses. There are some important things to know about the FSAs:

  • There are two FSAs—the Health Care FSA and the Dependent Care FSA.
  • Each year during Annual Enrollment, you must re-enroll in the FSAs and decide how much you want to contribute. Your elections do not roll over automatically.
  • Your FSA contributions are deducted from your paycheck before taxes, lowering your taxable income. Also, you don’t pay taxes when you withdraw money from your FSA for eligible expenses.
  • You can incur eligible expenses until December 31 for the Health Care FSA. If you have a remaining balance, you may roll over up to a maximum of $500* to the following year. (See below for special 2020 and 2021 plan year provisions.)
  • You cannot change your election during the year unless you have a qualified life event. (See below for a special 2021 plan year provision.)
  • If you elect both the Health Care FSA and the Dependent Care FSA, your contributions are separate elections. You cannot transfer money from one account to the other.

Special COVID-19 considerations

To provide more flexibility in light of COVID-19, there are several changes to the FSAs for the 2020 and 2021 plan years only:

  • You will have more time to use your unused FSA funds. Any balance remaining in your 2020 Health Care and/or Dependent Care FSAs will roll over into your 2021 account(s), and any balance remaining in your 2021 Health Care and/or Dependent Care FSAs will roll over into your 2022 account(s). This is a temporary change. Any funds in excess of $500* remaining in your 2022 Health Care FSA as of December 31, 2022 will be forfeited. Any funds remaining in your 2022 Dependent Care FSA as of the April 1, 2023 reimbursement deadline will also be forfeited.
  • You may use your 2020 Dependent Care FSA funds to reimburse expenses for a dependent under age 14 (versus the typical eligibility under age 13).
  • You may increase or decrease your 2021 Health Care and/or Dependent Care FSA election amounts at any time, without a qualified life event. However, your new FSA election is on a go-forward basis and cannot be lower than your year-to-date paycheck deductions or any amounts you have already been reimbursed from the FSA.

If you have any questions about these changes, please contact hrstaff@alliant.edu.

* This amount is subject to change based on Internal Revenue Service limits.

Warning!

If you are enrolled in a Consumer-Directed Health Plan (CDHP), you can NOT contribute to a Health Care FSA, because you are eligible for a Health Savings Account (HSA). You can participate in the Dependent Care FSA.

Learn more about the HSA

You have two FSA options, both administered by PayFlex:

Health Care Flexible Spending Account

Use a Health Care FSA to pay for your or your covered dependents’ eligible health care expenses, including:

  • Co-pays and coinsurance for medical services
  • Prescription drugs
  • Dental care, like filings and braces
  • Vision care, like glasses and contacts
  • Hearing care, like exams and hearing aids

You can find a full list of eligible expenses in IRS publication 502.

There is a $100 minimum contribution per calendar year. The maximum contribution depends on your marital status and how you file your taxes:

  • Single: $2,750
  • Married, filing jointly: $2,750, combined with your spouses’ contributions
  • Married, filing separately: $2,750 for you; $2,750 for your spouse

You have access to your entire Health Care FSA election on January 1.

Dependent Care Flexible Spending Account

Use a Dependent Care FSA to pay for dependent care-related expenses you incur while you and your spouse (if applicable) are at work, are actively looking for work, attend school, or are disabled. Eligible dependents include your children under age 13, a disabled spouse, or other disabled dependent (e.g., a parent). Eligible expenses include:

  • Nursery, day care, and babysitting
  • Day camps
  • Elder care

You can find a full list of eligible expenses in IRS publication 503.

There is a $100 minimum contribution per calendar year. The maximum contribution depends on your marital status and how you file your taxes:

  • Single: $5,000
  • Married, filing jointly: $5,000, combined with your spouses’ contributions
  • Married, filing separately: $2,500 for you; $2,500 for your spouse

Your Dependent Care FSA election will be contributed to your account in equal amounts throughout the year. You cannot submit reimbursements for amounts over the current balance in your Dependent Care FSA.

IMPORTANT! The government requires all companies sponsoring Dependent Care FSAs to conduct periodic tests to ensure the plan does not favor Highly Compensated Employees (HCEs) with respect to eligibility and benefits. If a plan fails one of these tests, HCEs may be required to reduce their contributions to the Dependent Care FSA.

Paying for Services

Here’s how you can use the money in your FSAs for eligible expenses:

PayFlex debit card

When you enroll, you receive a debit card to pay for eligible expenses. Money is deducted automatically from your balance at the point of sale.

Claims

If you pay out of pocket, you can then submit a claim for reimbursement online, through the PayFlex mobile app or by mail with a claim form. Review the claim submission instructions for more information.

Enroll in direct deposit! With direct deposit, you can be easily reimbursed from both your FSAs. Enroll online or mail in a paper authorization form.

Keep your receipts. The IRS may require you to submit a receipt or Explanation of Benefits (EOB) to PayFlex to prove your expense was indeed eligible for reimbursement from your FSA.