Flexible Spending Accounts
A Flexible Spending Account (FSA) allows you to save on your taxes while paying for certain medical bills or day care expenses. You may choose to enroll in the Health Care Spending Account, the Dependent Day Care Spending Account, or both.
When you enroll in an FSA, you chose an amount to be deducted from each paycheck and placed into a special account. The payroll deduction is taken from your pay before federal and state income taxes are calculated and deducted, which means you actually reduce the amount of taxes you pay.
Ohio University's Flexible Spending Accounts are administered by WageWorks. Visit www.wageworks.com
to learn more. Enrollment is processed directly through the WageWorks website. Please note:
As announced during our 2012 benefits open enrollment, The Patient Protection and Affordable Care Act imposed a $2,500 annual contribution limit on health care flexible spending accounts effective in 2013. Accordingly, the university reduced the health care flexible spending account limit from $5,000 to $2,500. However, on May 30, 2012 the IRS released Notice 2012-40 which stated that the $2,500 limit applies only to flexible spending account plan years that begin after January 1, 2013 and that flexible spending account plan years beginning before January 1, 2013 can maintain their current annual limit. The $2,500 limit for the health care flexible spending account will apply to elections made during the 2013 open enrollment process for the 2013-2014 plan year (beginning July 1, 2013).
Plan Year Maximum:
|$5,000 for 2011-2012
$2,500 for 2012-2013
You can use your Health Care Spending Account to pay for eligible expenses that are not covered by your medical plan. Use your account to pay for expenses such as deductible and coinsurance, services such as acupuncture, and supplies such as crutches.
Dependent Care Account
|Plan Year Maximum:
- $2,500 if you are married and file your taxes separately
- $5,000 if you are single or you are married and file your taxes jointly.
|| Dependent Care Listing
You can use your Dependent Day Care Spending Account to pay for nursery school or day care for your child, and in-home care for a dependent adult. Expenses must occur within the benefit plan year (fiscal) for which you are enrolling to be eligible for reimbursement.
Enrolling is Easy!
Visit www.wageworks.com during your annual benefits open enrollment and select 'Open Enrollment'. If you have not utilized the WageWorks system previously you will be asked to create a user ID and password. Use the last four digits of your social security number as the ID code.
While there are many advantages to Employee Spending Accounts, there are also limitations. The IRS has guidelines on which expenses are allowable and disallowable under an FSA. To see a complete list of eligible expenses under a Health Care Spending Account, refer to IRS publication 502. Please read the following information before you decide to participate.
How the Accounts Work
- First, estimate how much you will incur during the year on eligible health care or dependent day care expenses.
- Then decide how much, if any, of your salary you would like to contribute to a Health Care Spending Account or Dependent Day Care Spending Account. You will make separate pre-tax contributions to each. These contributions will be deducted from your pay each pay period.
- As you incur eligible medical expenses throughout the year, they can be reimbursed from your account by using your WageWorks debit card or submitting a claim form. Remember, the money is never taxed– going into your account or coming out.
- KEEP YOUR RECEIPTS! The IRS maintains oversight of flexible spending accounts and requires a detailed bill or receipt must list the service or product received, the date of the service or sale, and the amount charged.
- The IRS also does NOT require a detailed bill for purchases made with a debit card at retail pharmacies (CVS, Kroger, Wal-Mart, etc.) or other entities who have complied with IRS rules regarding use of debit cards.
Because your FSA deposits are not taxed, they are subject to these limitations by the IRS:
- You cannot change or stop your deposits to your FSA until the next enrollment period, unless you have a change in your family status such as marriage, divorce, death of a spouse or child, birth or adoption of a child, or change in the employment status of you or your spouse. You may make deposit changes within 31 days of the change in status.
- Requests for reimbursement through FSA must be for services provided during the plan year (July- June) in which you make your deposits to your FSA. Reimbursement requests must be made no later than September 30 of the following year.
- Any unused balances after the plan year has ended will be forfeited. Therefore, you must plan your deposits carefully. Under current tax law, if you deposit more money in your FSA than you need during the plan year, you will lose this money.
- You cannot transfer funds from one account to the other. For example, you cannot use money from your Dependent Day Care Account to pay for healthcare expenses.
Dependent Day Care Spending Account or Dependent Care Federal Tax Credit?
Deciding whether to contribute to the Dependent Day Care Spending requires that you determine whether it is more beneficial to use an FSA or the tax credit available when completing your federal tax return. The tax credit reduces your taxes owed, whereas an FSA reduces your taxable income. You are encouraged to contact a tax advisor if you are unsure about how either of these options may affect you financially.
Contact WageWorks at 1-877-924-3967