HealthEquity
YOUR FSA
Introduction
An FSA is an employer-sponsored benefits program that enables employees to save pre-tax dollars to pay for qualified medical expenses, regardless if they participate in the employer’s health plan. Because health FSAs are employer-sponsored, an employee has access to the entire year’s funds on the first day of the plan year.
How do I sign up for an FSA?
During your employer’s open enrollment, sign up to participate in an FSA, then determine the amount you would like to contribute from your pre-tax earnings. Typically, anyone whose employer offers an FSA can participate, including employees not covered under the employer’s health plan. Your employer may exclude certain types of employees, such as part-time, seasonal, or temporary. Ask your employer benefits team to verify eligibility. Self-employed individuals cannot participate in a flexible spending account.
Contributions
FSAs are typically funded through payroll contributions. While your entire election amount is available at the beginning of the plan year, your payroll deduction amounts will be divided equally among each paycheck for the benefit year.
Contribution limits
Contributions to an FSA are limited by the IRS to $3,050 per year. If you are married, each spouse may contribute up to $3,050 to his or her own FSA, even if both participate in the same FSA-sponsored by the same employer. However, your employer’s plan may further limit the contributions into an FSA.
Spouse and other tax dependents
Your FSA funds can be used to pay for your qualified medical expenses, as well as those of your spouse and other dependents. This is true, even if the dependent is not a tax dependent or covered under your health plan. Funds can also be used for children until age 26 (see page 31).
Medical expenses after your FSA is established
Once a qualified medical expense is incurred by you or an eligible dependent, you can use your FSA funds to make payment. Payments, also referred to as distributions, are tax-free as long as they are used for qualified medical expenses. You can pay a provider from your FSA directly, or you can pay out-of-pocket and reimburse yourself later. Simply keep the documentation (itemized receipt/invoice/explanation of benefits) of the expense, or upload it to the member portal.
Direct payments to providers
After you have received an invoice from your provider and matched it with an EOB from your health plan, you are ready to make a payment. You can use the member portal to setup a direct payment. We’ll send the payment directly to the provider and include all of the information necessary to apply the payment to your bill.
FSA debit card payments
After you have received an invoice from your provider and matched it with an EOB from your health plan, you are ready to make a payment. You can use your FSA debit card to make payments to your provider(s). This is especially convenient at the pharmacy. Most providers will also accept the card over the phone, online or written-in on the statement for payment. In order for your card to work, you must have the balance available in your FSA; no overdraft is available. The card will not work at ATMs and will typically only work at appropriate medical facilities. The card should always be run as “credit” and no PIN is required. Lastly, be sure to keep all receipts as documentation of your purchases or upload them to the member portal.
Qualified medical expenses
Qualified medical expenses are designated by the IRS. They include medical, dental, vision and prescription expenses. See our database of qualified medical expensesfor a list of specific examples.