Flexible Spending Accounts
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.
Health Care Accounts
These are Acceptable Medical expenses
Your Health Care Account may be used for the following expenses:
- Medical, dental, and vision co-payments and deductibles.
- Prescription drugs, including birth control pills, and co-payments.
- Vision and hearing care expenses.
- Orthodontia expenses (adults and children).
- Weight loss and smoking cessation programs if termed "medically necessary" by your physician.
- Other health care expenses not covered by your insurance plan.
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.
Dependent Care Accounts
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:
- Nursery schools or pre-schools used in place of day care.
- Licensed day care centers.
- Private babysitters, either in their home or your home.
- Custodial care for dependent adults.
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.
Registration
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.
Maximizing Your Flexible Spending Account Benefits
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.
- You may submit requests for reimbursement of expenses incurred during the plan year up to 90 days after the end of the plan year.
- Funds may not be withdrawn from the account for any reason other than the reimbursement of eligible expenses, even if you separate from the University. If you terminate employment at SVSU before the end of the plan year (December 31), you may continue to request reimbursement, up to the balance in your account, for eligible expenses incurred before the date of termination.
Change In Family Status
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:
- Marriage or divorce.
- Birth or adoption of a child.
- Death of a spouse or dependent.
- Change in employment, such as you or your spouse's layoff, job determination, change from full to part-time status, taking an unpaid leave of absence, or a significant change in your spouse's health coverage.
Requesting Reimbursements
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.
Issues to Consider
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:
- Do you expect the overall health of you and your family members to be the same as this year?
- Did you have any large bills this year, such as surgery or pregnancy that are not likely to recur next year?
- What are the deductibles and co-pays for your current benefit package? You may pay for those expenses on a pre-tax basis using your Health Care Flexible Spending Account.
- Is there any other reason you might expect higher or lower medical or dependent care expenses next year?
- Is your child entering school next year? If so, your dependent care costs could decrease from previous years.
If you have any additional questions regarding the Flexible Spending Accounts please contact Accounts Payable at 989.964.2063.