General Questions & Answers
What is a Flexible Spending Account?
Sometimes referred to as a cafeteria plan, flex plan, or a Section 125 plan, a Flexible Spending Account (FSA) enables employees to set aside a portion of their income free of all taxes into a reimbursement account so that they can pay for eligible expenses. At the beginning of each plan year a participant estimates what expenses they expect to have during the plan year. The annual elections are divided by the number of pay periods in the year and deposited, pretax, into each participants FSA Account. Participants use the tax free money in their account to pay for eligible expenses throughout the plan year. There are two types of FSA accounts, Medical Reimbursement Accounts and Dependent Care Accounts. Both types enable employees to pay for eligible expense with tax-free dollars.
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Medical Reimbursement Account
A Medical Reimbursement account allows participants and their dependents to pay for eligible medical, dental and vision care expenses with pre-tax dollars. Typical expenses include eye exams, eyeglasses, eye surgery, contact lenses and solutions, dental visits, orthodontic care, medical examinations, mental healthcare, chiropractic services, prescription drugs, insurance co-pays and deductibles and expenses that are not reimbursed by health insurance. Also included in these types of plans are Over-The-Counter (OTC) drugs that are medically necessary. Examples of OTC items that are eligible under a Medical Reimbursement Account include allergy medications, aspirin and antacids. For more information about OTC click here. For a more complete list of what’s under a Medical Reimbursement Account click here.
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Additional Medical Questions and Answers
What if I am not covered under my company's health insurance plan?
You and your family can still participate in the Medical and Dependent Care Accounts as long as you have meet the eligibility requirements outlined in your Summary Plan Description.
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Is cosmetic surgery covered under a Health FSA?
Cosmetic surgery is not covered unless it medical necessary for example for a congenital abnormality, or to repair damage caused by an accident or trauma.
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Can I use the Medical Reimbursement Plan to Make COBRA payments?
COBRA payments are not eligible.
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If I don’t use the money in my Medical Account plan I loose it, why?
This is an IRS rule that your employer and BeneFlex must follow to keep the plan in compliance. Your account balance and claims history are available 24/7 at the BeneFlex Resource Center
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If I use the money in my dependent care account can I use the money in my Medical Reimbursement Account to pay for Dependent Care expenses?
No, the IRS prohibits transferring funds between accounts.
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Dental Care Reimbursement Eligibility
Is tooth bonding an eligible expense?
Bonding is generally not covered since the IRS considers Bonding to be a cosmetic expense. But if there is a medical necessity for the procedure it will be covered. When providing substation in addition to a receipt you will need to provide a note form the provider stating that the bonding was for a medical necessity.
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Are tooth Implants allowed?
Yes, as long as it is not for cosmetic reasons.
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Is bleaching covered?
No medical reason for bleaching exists. It is not covered.
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Are Monthly payments for braces covered?
Most Orthodontia is paid in monthly installments. The monthly payments within your plan year are eligible for reimbursement. In addition, the down payment is eligible as long as it is billed within the current plan year.
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Dependent Care Reimbursement Account
The Dependent Care Account allows participants to pay for eligible child and elder care expenses provided by qualified caregivers. To be eligible, your dependent must be claimed on your income tax return, be younger than age 13, or be physically or mentally incapable of caring for him/herself, and the dependent must be living in your house.
What Expenses are Eligible?
- Day Care for a child under the age of 13
- After-School program or day camp for a child under the age of 13
- Nanny expense, for services provided inside your home
- Nursery school and preschool expense
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Dependent Care Questions and Answers
Is private school covered under Dependent Care?
Pre School and Nursery school is covered but tuition to a private school for grades kindergarten and up are not covered.
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Are nursing home payments allowed under the plan?
To be eligible the dependent must live in your home a minimum of 8 hours a day.
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If I use the money in my Dependent Care account can I use the money in my Medical Reimbursement Account to pay for Dependent Care expenses?
No, the IRS prohibits transferring funds between accounts.
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I presently take the dependent care tax credit on my tax return. Can I also have a Dependent Care Reimbursement Account and if not, which is better?
You cannot take the same deduction on your tax return and Dependent Care Account. Every situation is different but, usually if your adjusted gross income or combined income is over $28,000 a year the tax benefit is greater with the Dependent Care Reimbursement Account.
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Are camp expenses reimbursable?
Day camp is a qualified reimbursable expense. Overnight/sleep away camp is not allowed. Additionally, the daytime portion of an overnight/sleep away camp is NOT a qualified reimbursable expense.
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Are Annual Registration fees allowed?
No, because annual fees do not go directly towards childcare the IRS does not allow it.
My child goes to Day Care but will start kindergarten mid-way through the plan year. Is this considered a change in status?
Yes, if a dependent no longer needs dependent care you can change your election within 30 days of the effective date.
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Transit and Parking Reimbursement Accounts
Mass transit and parking accounts allow you to set aside a portion of your salary with pre-tax dollars, to pay for eligible transportation and parking expenses.
No matter how you get to work – bus, train, subway, vanpool or ferry a Mass Transit and Parking Reimbursement Account saves you money on your commute. You can save up to $400.00 a year on Mass Transit and $950 on Parking, (if you pay for parking to get to work). You can save time and eliminate paperwork when you purchase your Transit and Parking vouchers with the BeneFlex Convenience Card and soon, you can go online and purchase your monthly transit and parking vouchers at the BeneFlex Transit Center and have home delivery of your monthly passes.
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What Expenses are Eligible?
Transit Passes:
A pass, token, fare card, voucher or similar item entitling a person to transportation on mass transit facilities or, provided by a person who transports people for compensation or hire in a vehicle which seats at least six adults, excluding the driver.
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Qualified Parking:
Parking provided on or near the employer's business premises or, at a location from which the employee commutes by carpool, commuter highway vehicle, etc.
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Commuter Highway Vehicle:
Transportation provided by an employer to an employee, in a vehicle which seats at least six adults (excluding the driver), in connection with travel between the employee's home and work, provided that 80% of the vehicle's mileage is reasonably expected to be for transporting employee from home to work or on trips where at least half of the adult seating capacity is filled by employees.
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Expense Limitations:
- Transit Passes
- $230.00 per month for the calendar year 2011.
- Qualified Parking
- $230.00 per month for the calendar year 2011.
- Commuter Highway Vehicle
- $230.00 per month for the calendar year 2011.
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General Questions
How do I benefit by participating?
Your biggest advantage is the tax savings. Every dollar you set aside in your account reduces how much you pay later in income taxes. Plus, you can be reimbursed for qualified expenses that you are already paying for!
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Why should I participate in a Flexible Spending Account
This account is used to pay for expenses that are not covered by insurance. For example, your insurance may not cover annual physicals, co-payments, eye exams, eye surgery, glasses, orthodontics, prescription drugs and hospital care.
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If I set aside part of my pay, won't I make less money?
No. Your net take-home pay will increase by the amount of taxes you did not pay.
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Can I change my contributions during the year?
Only if you have a change in status such as: marriage, birth, adoption, or a change in your or your spouse's employment status. For a more detailed list click here www.changeofstatus.com.
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What if I currently take the Dependent Care credit on my annual tax return?
Whether to participate in the daycare portion of this plan depends on your income, filing status, number of dependents and annual daycare expenses. The amount you deposit in your Dependent Care Reimbursement Account reduces the amount, dollar for dollar, that you can claim as a credit on your tax return. Contact your plan administrator for further information.
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How do I get reimbursed for my expenses?
You can receive reimbursement is two ways:
If your employer participates in or special program, once you have submitted your election form a BeneFlex Convenience Card will be mailed to your home. Eligible expenses are debited from your FSA account and paid directly to your vendor at the point of service. The card eliminates claim forms and waiting for reimbursement. The card is accepted at all vendors that accept Master Card® Please save your receipt for all card purchases. You may be asked to submit a copy of the receipt for verification.
Alternatively, a Claim Form can be obtained at our website or, at your company’s Human Resource Department. Submit the claim with a copy of your receipt to BeneFlex by mail or fax (732) 428-8111. Your claim will be processed and your funds will be Direct Deposited into your account or, a check will be sent to you directly.
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Do I have to wait for the money to be deposited in my account in order to make a claim for reimbursement?
The amount you set aside each year for the Medical Reimbursement Account is available to you at any time throughout the plan year. The amount available to you from your Dependent Care and Mass Transit account is the amount you have contributed to date.
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How do I know how much is available in my accounts?
All account data is available at our website. Click here to see an example.
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What happens to my accounts if I terminate my employment?
You will be able to request reimbursement for Medical and Dependent Care expenses that you incurred prior to your termination. Check your Summary Plan Description (SPD) for additional rights or benefits provided by your company's plan.
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What if I don't use all of the money I set aside in my account(s)?
Carefully review your Estimated Expense before making the decision to participate. Any contributions that are not used during the plan year may not be paid to you in cash or used in a later plan year.
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If I put money into a Flex plan will I have to pay taxes on the money at the end of the year?
You will never pay tax on the money you put into a Medical Reimbursement Account (FSA) or, Transit plan.
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Can I submit a claim early in the plan year before my account has been fully funded?
Yes, you can submit a claim as soon as you have become a participant. Different accounts have different rules, for the Medical Reimbursement Account you can be reimbursed for the entire amount of your claim up to what you have elected for the plan year. For the Dependent and Transit Accounts you will be reimbursed up to your account balance. As additional payroll deposits are made the system will reimburse you until your claim has been paid.
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What is the maximum annual amount that I can elect?
The Medical Reimbursement Account maximum is set by your employer. Please check your Summary Plan Description Dependent or contact your Human Resources Department. The Dependent Care maximum contribution is $5,000 for head of house holds or, married filing a joint tax return and $2,500 for married filing separate tax returns.
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Can I have my checks direct deposited?
Yes for a direct deposit form click here.
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Where can I obtain a claim form?
For claim forms click here.
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Where can I get a list of covered expenses?
Our web site has a full listing of eligible expenses. Please click on the link below to view the appropriate category.
For a more detailed list of Medical/Dental Reimbursement plans please go to http://ftp.fedworld.gov/pub/irs-pdf/p502.pdf
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