Flexible Spending Account (FSA)
The Columbia Public School District offers a Section 125 Flexible Benefits Program (also referred to as cafeteria plan) administered by ASI. This program is an Internal Revenue Service approved plan, and is governed by IRS rules & regulations. The flexible benefits plan allows participants to pay certain eligible expenses with pre-tax dollars, with a potential savings in income taxes. By participating, you reduce your income taxes and increase your take-home pay when you pay for predictable, eligible health care and dependent care expenses with pre-tax dollars. When paid through the FSA, you will save, on average, approximately 25% of each dollar spent on these expenses.
Enrollment Period: New employees must enroll in the plan within 31 days of their hire date. Open enrollment occurs in October of each year and new elections take effect January 1. Once you enroll in the plan, you cannot stop or change your contribution until the end of the plan year, unless you experience a qualifying event.In October, during open enrollment, you determine the amount of your predictable expenses in these accounts for the plan year January 1 through December 31. Your election is then divided by the number of paychecks you receive during the year, and deducted from each paycheck before taxes are calculated. As expenses are incurred, you simply pay for the service or product with the pre-loaded debit card from ASI. If you don't pay with your card and need to file a claim for reimbursement, you file a claim with ASI for reimbursement from your pre-tax Flexible Spending Account, and receive a tax-free reimbursement. It’s a great way to pay for predictable expenses, however, if you overestimate your election, you lose what you don’t use.
Dependent Care FSA Overview: Dependent Care Flexible Spending Accounts create a tax break for dependent care expenses (typically child care or day care expenses) that enable you to work. Additionally, if you have an older dependent who lives with you at least 8 hours per day and requires someone to come into the house to assist with day-to-day living, you can claim these expenses through your Dependent Care Flexible Spending Account. If you are married, your spouse must be working, looking for work or be a full-time student. If you have a stay-at-home spouse, you should not enroll in the Dependent Care Flexible Spending Account. The IRS allows no more than $5,000 per household ($2,500 if you are married and file a separate tax return) be set-aside in the Dependent Care Flexible Spending Account in a calendar year.
Please note that IRS regulations disallow reimbursement for services that have not yet been provided, so even if you pay in advance for your expenses, you can only claim service periods that have already occurred. For example, if you are required to pay for all of January's child care expenses on January 1st, you cannot claim the entire month's expense until the end of January. However, you may submit a claim every week, at the end of that week, for those expenses.
Expenses may only be claimed for dependents that are under the age of 13; or for older dependents that live with you at least 8 hours each day and are incapable of self-care.
- Eligible expenses include day care, baby-sitting, and general purpose day camps.
- Ineligible expenses include overnight camps, care provided by a dependent, your spouse or your child under the age of 19 & care provided while you are not at work.
Remember that your election is fixed for the entire year unless you have a qualifying event.Traditional FSA (Must be enrolled in the Basic Plan to Participate): The Traditional FSA is a tax-free account that allows you to pay for essential health care expenses that are not covered, or are partially covered, by your medical, dental and vision insurance plans. By contributing a portion of your payroll dollars into your FSA on a pre-tax basis, you can save from 25% to 40% on the cost of eligible expenses you are already incurring.
When you enroll in a FSA, you decide how much to contribute to each account for the entire Plan Year. The money is then deducted from your paycheck, pre-tax (before Federal & State income taxes and FICA taxes are deducted) in equal amounts over the course of the plan year. After you incur expenses that qualify for reimbursement, you submit claims (reimbursement requests) to ASIFlex to request tax-free withdrawals from your FSA to reimburse yourself for these expenses.
The key to getting the most out of your Traditional Flexible Spending Account is to maximize your contributions based on the expenses you, or any of your tax dependents, anticipate incurring during the plan year. You can elect up to $2,600 per plan year. To plan your annual election amount:2) Review your medical expenses from last year.3) Write down any additional eligible expenses you anticipate incurring in the coming plan year.4) Be sure to include at least some money to cover your deductible expenditures.5) Estimate your cost for each of these FSA eligible expenses. (Don't forget that your tax dependents' expenses qualify, too, even if they are on a different health insurance program.)
Things to remember about the Health Care FSA:
Limited FSA (Must be enrolled in the Plus Plan to Participate): Works exactly the same way as the Traditional Flex Plan (see above), but ONLY Dental and Vision expenses may be claimed for reimbursement. NO MEDICAL.Reimbursement: To use your ASI debit card, or to receive reimbursement, you must incur the eligible expenses on or before December 31 of the plan year. You forfeit any money in your account that is not used by December 31. Claims must be filed no later than March 31 of the following year to claim expenses and to avoid forfeiture.Premium Savings: All medical and dental insurance premiums will be deducted from your paycheck on a before-tax basis. Per IRS rules, you can only stop premiums during open enrollment, or if you have a qualifying event such as divorce, other coverage available, or emancipation. If you think you will want to stop insurance without having a qualifying event, you can opt-out of the before-tax deduction by contacting the Employee Benefits office and requesting the opt-out form. The opt-out form must be completed annually during open enrollment to continue the after-tax deduction.
- Your election amount is fixed for the entire plan year (unless you have a qualifying event)
- You must submit valid claims before the end of the claims run out period. Any unclaimed remaining funds will be forfeited to your employer, so estimate your expenses carefully and set money aside accordingly.
- Expenses for any of your tax dependents are eligible for reimbursement, even if they are not on your employer's health insurance program.
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