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 the WageWorks site to learn more.
Plan Year Maximum: $2,700 (July 1, 2019- June 30, 2020)
Eligible Expenses: Healthcare Listing
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.
Generally an eligible dependent is: a spouse, child(ren) under the age of 26, child(ren) over 26 who are tax dependents, a domestic partner who is a tax dependent. Visit the WageWork site for more information on dependent eligibility.
Using your account for orthodontia expenses? Read Orthodontia Payment Guidelines
Dependent Day 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.'
Eligible Expenses: Dependent Day Care Listing
You can use your Dependent Day Care Spending Account to pay for nursery school or day care for your child (under age 13) , 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.
WageWorks provides further details on day care eligibility on their site.
Enrolling is Easy
Sign up during the annual benefits 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.
The total amount enrolled in a flexible spending account is deducted throughout the plan year. Faculty benefit premiums are deducted over 18 pays each year from August 31 through May 15. Administrators on a 10 month contract have benefit deductions over 20 pays, 11 months over 22 pays and 12 months over 24 pays. Classified and Administrative Hourly are on the bi-weekly payroll and receive 26 pays per year. For hourly employees flexible spending account deduction(s) begin on the check where the pay period includes July 1st.
You have access to the total amount elected in a Healthcare Flexible Spending Account at the beginning of the plan year or date of your qualifying life event. For Dependent Day Care Accounts you only have access to contributions you have made to your account to date. For example, a faculty member who enrolled in a $5,000 Dependent Day Care Account during Open Enrollment would have $277.78 deducted beginning on their August 31st check. Eligible expenses up to that amount may be claimed.
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.
- You should plan your deposits carefully.
- 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.
- If you have money left in your Medical Flexible Spending account at the end of the plan year or next plan year it will automatically roll over to the next year. The amount that can roll over is capped at $500. This is for medical spending accounts only and does not apply to dependent day care accounts.
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