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Frequently Asked Questions About FSA

How can I benefit from participating in a Flexible Spending Account (FSA)?

How does the FSA work?

How does contributing to an FSA reduce my taxes?

Wouldn’t I save more by just taking a deduction on my income tax?

How much should I contribute?

Will I really save on my health and/or dependent care expenses?

Where can I find a list of eligible and ineligible expenses for reimbursement?

If I don’t spend all the money in my FSA at the end of the year, do I get to keep it?

How do I submit a claim to get reimbursed from my FSA?

What happens if I submit a claim for an amount greater that what I have contributed in my FSA so far this year?

Can I continue participating in my FSA under COBRA?

Can I use a dependent care FSA for elder care?

If someone cares for my children in my home instead of a day care facility, do these expenses qualify for reimbursement from my FSA?

What is FSA Grace Period?

How can I benefit from participating in a Flexible Spending Account (FSA)?
The Great-West Healthcare FSA lets you use pre-tax money for eligible medical and dependent care expenses. By having this money deducted from your paycheck, you pay less in taxes and have money available when you need it to pay for covered services.
There are two types of FSAs:

1.	Health care FSA, for reimbursement of out-of-pocket medical expenses incurred by you and your dependents
2.	Dependent care FSA, for reimbursement of out-of-pocket expenses related to care of eligible dependents while you (and your spouse, if you're married) work

How does the FSA work?
The FSA works in four steps:

1.	Determine how much you'd like to contribute to your FSA for the plan year. To calculate your potential tax savings and health or dependent care costs, use the FSA Savings Calculator.
2.	Money is deducted from each paycheck throughout the year and kept in your FSA.
3.	When you incur an eligible expense, submit an FSA claim form to request reimbursement in pre-tax dollars.
4.	Reimbursement checks include an Explanation of Benefits (EOB) that shows year-to-date deposits, claims submitted, claims paid and FSA balance. Three months before the end of the plan year, you’ll receive an account status report that provides account totals and reminds you to submit outstanding claims to avoid forfeiting any contributions. Remember, any unused money in your FSA at the end of the plan year will be lost, so it's important to track your contributions and reimbursements carefully.

How does contributing to an FSA reduce my taxes?
Contributions to your FSA are deducted from your paycheck before any taxes are taken out. You do not pay federal income tax, Social Security tax, and (in most cases) state and local income taxes on the portion of your paycheck contributed to your FSA. The FSA Savings Calculator can show your estimated tax savings based on your anticipated expenses.

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Wouldn’t I save more by just taking a deduction on my income tax?
According to the IRS, only medical and/or dental expenses that exceed 7.5 percent of your adjusted gross income can be deducted from your income taxes. Most people do not have expenses high enough to qualify for this deduction.

For work-related dependent care expenses, the tax credit amount is determined by applying a percentage to your total dependent care expenses. According to current tax structure, generally the tax credit is more beneficial than a dependent care FSA if your family income is under $25,000.

Keep in mind that contributions for an FSA are taken out of your pay before taxes are applied, thus reducing your gross salary and your taxable income. Talk to your accountant or financial planner for more assistance.

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How much should I contribute?
You should contribute the amount of money you expect to pay out-of-pocket for eligible expenses for the plan period, considering:

	Last year's medical and/or dependent care expenses
	Any medical or dental care costs you foresee that might not be covered under your health care plans (e.g. deductibles, copayments, over-the-counter drugs)
	Any changes in your family status that might have an impact on your medical/dental or dependent care expenses

Use the FSA Savings Calculator to help determine the right amount for you.

Maximum contributions: Your employer can identify the maximum amount that can be contributed to your health care FSA. See your FSA Plan Benefits Overview. Your employer also can vary the maximum contribution to the dependent care FSA; however, the maximum contribution according to IRS rules is $5,000 per calendar year for those who are married and filing jointly, head of household or single. The maximum for those who are married and filing separately is $2,500.

Will I really save on my health and/or dependent care expenses?
Depending on your individual income and tax filing status, you could save as much as 20-50 percent on eligible health care services by participating in an FSA.

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Where can I find a list of eligible and ineligible expenses for reimbursement?
Visit Eligible/Ineligible expenses for a list of health care and dependent care expenses. Please note that your employer may have a customized list of eligible/ineligible expenses. Also, the IRS and/or your employer may modify the list periodically. If you are unsure whether an expense is eligible, please contact your plan administrator or customer service at (800) 759-4952.

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If I don’t spend all the money in my FSA at the end of the year, do I get to keep it?
No. According to the IRS's "use it or lose it" rule, if you do not use all the money in your FSA for expenses incurred during the plan year, you will forfeit the unused balance. Your unused balance cannot be carried over. However, if you are like most FSA plan members, you will use all of the money in your account. And even if you leave some behind, your tax savings may outweigh the loss.
You can make the most of your FSA by carefully planning your yearly expenses. If you are unsure of how much to save, be conservative. The FSA Savings Calculator can help you decide how much to set aside.

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How do I submit a claim to get reimbursed from my FSA?
Complete and submit the FSA claim form or call customer services at (800) 759-4952. All dependent care claims must be submitted via claim form. Once your claim has been processed, you will receive a reimbursement check (or a direct deposit of funds if your employer offers this feature). Contact your plan administrator to see if direct deposit is available to you.

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What happens if I submit a claim for an amount greater that what I have contributed in my FSA so far this year?
IRS regulations determine what happens in this case.

For Health Care Expenses: When you submit an FSA claim for a health care expense, you will be reimbursed up to the full amount of your annual election, regardless of the amount of money that has been deposited into your account.

For Dependent Care Expenses: If your dependent care FSA balance is less than the amount of your claim, you will only be reimbursed for the amount of money available in your account at that time. The remainder will be reimbursed once your future contributions are deposited into your dependent care FSA. This process lets you submit a claim only once and receive funding as it becomes available, rather than be denied payment and be forced to resubmit the claim until it can be paid in full.

Can I continue participating in my FSA under COBRA?
Refer to your Summary Plan Description regarding the rules of your specific plan.

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Can I use a dependent care FSA for elder care?
You can use the FSA for eligible daycare expenses so that you (or you and your spouse) can work if:

	You are responsible for at least 50 percent if the support of an elderly parent or any person living with you who is physically or mentally incapable of self-care.
	This person is noted on your income tax statements as a legal dependent.
	The elder care is needed because you work and your spouse is a full-time student.

If someone cares for my children in my home instead of a day care facility, do these expenses qualify for reimbursement from my FSA?
Yes. You can include wages paid to a babysitter in or outside your home if the services are necessary in order for you (or you and your spouse) to work. Expenses also will qualify for a dependent care FSA if you work and your spouse is a full-time student. Note: in-home services are not covered if the babysitter is someone you declare as a dependent.

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What is FSA Grace Period?
FSA Grace Period or FSA Extension is a new guideline issued by the IRS that allows employers to offer members a grace period of up to 2 months and 15 days after the end of the plan year. During the grace period, employees can accrue eligible expenses to submit against the previous plan year. For example, if an employer offers a calendar-year FSA plan (i.e. plan year is 1/1 through 12/31) with a 2 month and 15 day grace period, members have through March 15, of the following year to incur eligible expenses for reimbursement from their current year funds.

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