Flexible Spending Accounts (FSAs) allow you to set aside a portion of your pay, on a pre-tax basis, to pay for certain out-of-pocket Health Care or Dependent Care expenses. If you anticipate out-of-pocket expenses for dependent care of health care expenses not covered in full or not covered at all by your health plans, you can save 28 percent or more by paying those expenses with money that has not been taxed. Amounts set aside in FSAs are not subject to federal, local or OASDI taxes - if you are in a higher federal tax bracket, your savings will be greater.
Baltimore County uses the services of Alliance Benefit Group to administer our Flexible Spending Accounts. Claims should be submitted to Alliance Benefit Group using the claim form found on their website.
A recent IRS ruling will permit participants in Flexible Spending Accounts an additional 2 and 1/2 months to incur claims after the plan year ends. That means this year's FSA participants will have from September 1, 2007 through November 15, 2008 to incur expenses that can be paid with the money you set aside for this year. The grace period for submitting claims for the coming plan year will remain December 31, 2008.
You can set aside from $130–$5,000 per family, per plan year (Sept. 1–Aug 31) to pay for dependent care expenses if you (and your spouse if married) work or attend school full-time. Eligible expenses as determine by the IRS are what you pay to qualified providers for dependent care for children until they reach age 13 or other dependents not capable of self-care who are considered your dependent for federal income tax purposes. Qualified dependent care providers must identify their federal taxpayer identification number or their social security number on receipts provided for reimbursement through your FSA.
Amounts you pay for dependent care using FSA funds cannot be claimed on your federal income tax return for dependent care tax credit. In most cases, the FSA provides greater tax-savings than claiming the tax credit for expenses you paid with after-tax dollars.
You can set aside from $130–$5,000 per family, per plan year (Sept. 1- Aug 31) to pay for out-of-pocket health care expenses for yourself and your dependents claimed for federal income tax purposes. You do not have to participate in a County Health plan to establish a Health Care FSA. This year you will also be offered the convenience of using a debit card to use the funds you set aside in your Health Care Flexibe Spending Accounts. The debit card can be used for allowed expenses only at any medical provider location or retail outlet that accepts Master Card. When using your FSA debit card, you may be required to provide receipts following your purchase or service - it's important to keep all your receipts when using the card in case you are asked to provide documentation of your charges.
All County health plans have office visit and prescription copay amounts for brand-name drugs that you can pay through a Health Care FSA. If you are enrolled in the Triple Choice plan, you may also have to pay deductible and coinsurance amounts for services other than office visits. There are examples to help calculate what your expenses may be as well as the savings you can realize in the County's 2007 Open Enrollment Benefit Guide.
Eligible expenses that can be reimbursed through a Health Care FSA are determined by the IRS (Publication #502). Examples include medical and prescription plan copayments and deductibles, balances you must pay after your benefit plan has made payment, your share of the costs for orthodontia, and even some services (such as LASIK surgery to correct eyesight or adult hearing aids), not covered by your benefit plans.
Health Care FSAs cannot be used to reimburse expenses for cosmetic procedures, custodial care and premiums paid for medical, dental or other benefit plans you obtain either through employment of private purchase.
The IRS requires that amounts set aside in the FSA accounts must be used each year only for qualified expenses. Balances that remain in an FSA account at the end of a plan year (after the grace period expires) cannot be returned to individual plan participants. Therefore, it is important that you estimate your annual expenses carefully. Because of the tax savings, you would have to lose more than those savings to be in a true loss position.
You are required to make a new election each plan year in order to continue participation in an FSA. This year, enrolling in an FSA is a part of the online enrollment process.
Revised June 14, 2007
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