Flexible Spending Accounts (FSA) allow you to designate a set amount of money and have it taken out of each paycheck and deposited into an account to be used for specific expenses. Federal Income and Social Security taxes will not be withheld from your contributions, making your taxable income lower. You may enroll in the Healthcare FSA (for medical, dental, vision, pharmacy, and other related expenses) and / or the Dependent Care FSA (primarily for dependent day care expenses). If you are enrolled in a High Deductible Health Plan (HDHP), you also have the option to enroll in a Limited Purpose Healthcare FSA which can be used for dental or vision expenses only.
Over-the-counter (OTC) drugs are available without requiring a prescription. Some examples of allowed OTC items are:
Use the money in these accounts to pay for eligible out-of-pocket healthcare (medical, dental, vision expenses) and dependent care (day care) expenses for yourself, your spouse, your children or for any person you claim as a dependent on your federal income tax return.
Remember to carefully estimate your plan year expenses when making an election. Typically, you must use all of the funds in your account by the end of the plan year or the money is forfeited per the IRS regulations. However, COVID-19 pandemic relief for 2020 and 2021 allows for the entire remaining balance to be rolled into the new year for Healthcare FSA and Dependent Care FSA (removes the $500 rollover cap on Healthcare FSA).
2021 Plan Year Maximums
You may roll over up to $500 of unused Healthcare FSA monies into the next year's FSA plan, but you still want to estimate your current year FSA plan contribution carefully. According to the IRS guidelines, all unused FSA funds in excess of $500 will be forfeited.
You are not eligible to participate in the Healthcare Flexible Spending Account (FSA) plan if you are currently enrolled in a Health Savings Account (HSA).
A list of eligible vs ineligible expenses is available on the Resources page.
If your spouse is not employed, your dependent care expenses are not eligible for reimbursement unless your spouse is a full-time student or is physically or mentally incapable of caring for himself / herself.
Eligible Dependent Care FSA expenses include before and after-school programs, licensed day care centers, nursery school or preschool, summer day camps, transportation to and from eligible care, an adult-day-care center, or elder care (in your own home or someone else’s). You can elect a Dependent Care FSA even if you have declined health coverage
A childcare provider must be a licensed day care center providing services. A family member or friend who keeps children in the home during the day is not eligible. You must have a federal tax ID number for the service provider to claim reimbursements for dependent care.
Eligible Expenses Must Be for the Care of:
A Limited Purpose FSA is a healthcare spending account that can only be used for eligible vision and dental expenses. Unlike a Healthcare FSA, this account can be held at the same time as a Health Savings Account (HSA). When coordinated with an HSA, the limited purpose FSA can further reduce your taxes while allowing you to allocate HSA funds to other purposes – including retirement.
By eliminating the need to use your HSA funds for these expenses, you have more to spend on regular medical expenses. More important, funding dental and vision expenses from a limited purpose FSA may also allow you to keep more savings in your HSA. Over time, those additional savings can really add up.
Debit Card Purchases
You will receive a debit card for your FSA plan. This debit card may be used to pay for eligible medical care expenses. Using a debit card is a convenient way to pay for your FSA expenses as many health providers accept the debit card. When you use your debit card, the funds are pulled from your account and paid to the health provider directly. This eliminates the need for you to pay out-of-pocket and file a claim to be reimbursed.
Please remember to keep all FSA claim receipts, even if you use your debit card. Some debit card claims will require you to provide a receipt to the plan administrator. In the event the FSA administrator needs additional information from you, you will receive a communication requesting receipt(s).
Not all vendors accept the debit card. Should you need to pay for an eligible expense and be reimbursed from your FSA, you will need to submit a claim to the address indicated on the claim form with appropriate documentation.
The IRS requires that any unused money in your account at the end of the plan year must be retained by your employer. You must use all of the funds in your account by the end of the plan year or the funds are forfeited. However, the IRS allows Healthcare FSA plan members to roll over up to $500 of unused funds for use in the following year. The $500 roll over option does not apply to the Dependent Care FSA.
Update: COVID-19 pandemic relief for 2020 and 2021 allows for the entire remaining balance to be rolled into the new year for Healthcare FSA and Dependent Care FSA (removes the $500 rollover cap on Healthcare FSA and allows rollover on the Dependent Care FSA).
The plan year runs from January 1 through December 31. Refer to the Summary Plan Description (SPD) for details.
Once you are enrolled, you may access https://medcom.wealthcareportal.com and register as a member. You may access your balance and claims information, and view other important FSA plan information on this website.
Medcom also offers a free mobile app for FSA participants to access your accounts from anywhere at any time. You will enjoy convenient mobile options to check balances, view transaction details, request a reimbursement, and submit documentation on the go.