The Flexible Spending Accounts option includes two types of accounts: health care and dependent care. You may choose to participate in one or both of them. The Flexible Spending Accounts make your earnings go further by allowing you to set aside pre-tax earnings to pay for eligible health dependent care expenses.
Your pre-tax dollars are deposited in your Flexible Spending Account(s) and are not considered taxable income. This saves you from paying social security, federal, state, or local income taxes on that portion of your salary. In addition, since your taxable income is lowered by the amount you place in your Flexible Spending Account(s), your withholding taxes are lower as well.
Flexible Spending Accounts should be used for predictable expenses only, since the Internal Revenue Service mandates that funds remaining in your account(s) at the end of the year cannot be returned to you.
Note: Although deposits to the Flexible Spending Account lowers your pay for purposes of computing your taxes, your life insurance coverage, retirement, and disability are not affected.
Your Health Care Account may be used for the following expenses:
Any item allowed as a medical deduction on your income tax return is eligible for reimbursement under the Flexible Spending Account as long as you do not also deduct those expenses on your income tax return.
Your Dependent Care Account may be used to pay for certain expenses connected with taking care of your eligible dependents as defined by the Internal Revenue Service for tax purposes, provided the care is necessary for you and your spouse to work.
Single persons as well as working couples may use the account for any of the following dependent care expenses, as long as they are incurred during working hours:
You cannot be reimbursed for dependent care payments you make to your spouse, to your child who is under the age of 19, or to any person you claim as a dependent on your income tax return. You are responsible for obtaining the taxpayer I.D. number of the child-care provider. This number is necessary to validate cost in the case of an adult.
There are two important limitations on the amount you may deposit for dependent care expenses. If you are married, your dependent care reimbursements cannot exceed the earned income of the lower paid spouse, unless the spouse is a full-time student or disabled. Also, you are limited in the amount you may deposit to your dependent care account to $5,000 annually.
In some circumstances you may realize greater tax savings if you use the federal child care tax credit instead of the Flexible Spending Account. Generally, persons with family incomes of $24,000 or more each year benefit more from using a Flexible Spending Account. However, SVSU cannot provide you with tax advice. You should seek the guidance of a professional.
A Flexible Benefit Enrollment and Election Form needs to be completed to begin participation in the program. If you are interested in starting a Flexible Spending Account, or if you have any questions, please contact the Human Resources office.
You should carefully determine how much you want to set aside in the coming year for these expenses, because Internal Revenue Service rules mandate that any funds left in your account 90 days after the end of the plan year must be forfeited. The Flexible Spending Account Worksheet will help you calculate the amount, $1 to $288 per pay period, you want SVSU to deduct for you. The maximum amount you can deposit to your health account is $2,500 annually. You are limited in the amount you may deposit to your dependent care account to $5,000 annually ($2,500 if married and filing separately). Your annual combined health and dependent care limit is $7,500.
Your Flexible Spending Account(s) should be used only for expenses that you know you will incur, because the Internal Revenue Service has made strict rulings governing the use of your account.
Once you have enrolled and specified the amount to be deposited into your Flexible Spending Account(s) from each paycheck, you cannot change or stop it during the plan year unless you have a significant change in family status. Such changes include the following:
Reimbursements will be paid on each Friday of off-payroll weeks. A Request for Reimbursement Form (available on-line) must be submitted along with proper documentation to the Controller's Office, Accounts Payable, South Comples A by Monday in order to receive reimbursement on the following Friday. Employees can pick up their reimbursement checks at the Cashier's Office.
To receive reimbursements for health care expenses, you must submit the expenses to appropriate insurance carriers before being reimbursed through your Flexible Spending Account. Simply present a copy of the explanation of benefits received for a medical, dental, or vision claim along with a Request for Reimbursement Form. In the event an eligible expense is paid and insurance is not involved, an itemized bill along with a paid receipt must be submitted with the Request for Reimbursement Form.
To receive reimbursement for dependent care expenses, you must submit a Dependent Care Provider invoice along with a Request for Reimbursement Form. Reimbursements will be paid up to the amount in the employee's account.
One way to plan your contribution to your Flexible Spending Account(s) is to estimate next year's expenses based on a comparison of this year's expenses. The Flexible Spending Account Worksheet can assist you in your comparison. Some questions to consider when making your decision regarding your Flexible Spending Account(s) are:
If you have any additional questions regarding the Flexible Spending Accounts please contact Accounts Payable at 989.964.2063.