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FSAs
A simple way to save
Take advantage of tax savings by participating in a flexible spending account (FSA). You can elect to have a portion of your paycheck contributed pre-tax to pay for qualified medical expenses such as deductibles, co-payments, dental and vision.
The example scenario below provides estimated FSA savings based on a family health plan and a 20% combined federal and state tax rate. The IRS sets the annual FSA maximum contribution limit; your company or provider may allot a lower amount for your FSA plan.
out-of-pocket medical expenses
$1000
out-of-pocket vision expenses
$500
out-of-pocket dental expenses
$500
tax savings
$400Funds from a healthcare FSA can be used for qualified expenses including medical, dental, vision, deductibles, co-payments and coinsurance.* With health care FSAs, the entire elected amount is available to you on the first day of the health plan year. You don’t have to wait for payroll deductions before paying expenses with your healthcare FSA.
See which medical expenses are qualified, potentially qualified, or not qualified.
See qualified medical expenses database
*For a full list of qualified expenses allowed by the IRS, see IRS Publication 502.
FSAs are generally “use-it-or-lose-it” plans. This means that amounts in the FSA at the end of the plan year generally cannot be carried over to the next year. However, the plan can provide for either a grace period or a carryover. Additionally, if an accountholder leaves an employer or retires, unused funds are forfeited. For more details, see IRS publication 969 or consult a tax advisor.
Some plans may allow up to $610 of unused FSA funds remaining at the end of a plan year to be carried over to the next year. Ask your benefits team for details about your plan’s FSA carryover and/or grace period policy.
The Baystate Health Plan allows up to $500 of unused FSA funds remaining at the end of a plan year to be carried over to the next year only if you have enrolled in an FSA for the current plan year. You have until March 31st, 2016, to submit claims for expenses incurred through December 31st, 2015.
During your employer’s annual enrollment, sign up to participate in an FSA. Select the option that best meets your needs and then determine the amount you would like to contribute from your pre-tax earnings. You can use the worksheet here to help estimate your needs.
Your employer will arrange to have the determined amount of your pre-tax earnings contributed to your FSA. Typically the amount withheld from your paycheck is equal each pay period.
When you incur a qualified expense, you can either pay with your FSA debit card or submit the expenses through the online member portal for reimbursement. Remember to save all receipts; you will need them for reimbursements and to validate your expenses.
1This card is issued by The Bancorp Bank pursuant to a license from Visa U.S.A Inc. The Bancorp Bank, Member FDIC
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