Flexible Spending Accounts
 

How Your Flexible Spending Accounts Work 

As a participant in the Flexible Spending Account Plan, you can set aside before-tax dollars for deposit in one or both of the following accounts: 

  • a Health Care Flexible Spending Account; and/or
  • a Dependent Care Flexible Spending Account. 

The above two accounts are completely separate. You cannot transfer money that is in one account to the other under any circumstances. 

During the year, you can make withdrawals from the appropriate account(s) to reimburse yourself for eligible health care and/or dependent care expenses paid by you. The term “eligible expenses” is important, because your expenses must meet specific requirements to qualify for reimbursement under the plan. Refer to the listing of eligible expenses provided within the Health Care Flexible Spending Account Reimbursement and Dependent Care Flexible Spending Account Reimbursement sections. 

ACCOUNT DEPOSITS
Your account deposits are made through convenient payroll deductions. During the annual open enrollment period, you can choose the amount of your before-tax payroll deduction deposits for the next calendar year (January 1 through December 31). 

Health Care Flexible Spending Account
You can deposit from $100 to $2,600 in your Health Care Flexible Spending Account each calendar year. 

Dependent Care Flexible Spending Account
If you are single, you can deposit from $100 to $5,000 in your Dependent Care Flexible Spending Account each calendar year. 

If you are married and file a joint tax return, you can deposit from $100 to $5,000 in your Dependent Care Flexible Spending Account each calendar year. (If you and your spouse file a joint tax return and your spouse is eligible to participate in a similar dependent care account where he or she works, the total combined deposits for you and your spouse cannot exceed $5,000.) 

If you and your spouse file separate tax returns, you can deposit up to $2,500 in your Dependent Care Flexible Spending Account each calendar year. 

Divorce or Separation: If you are separated or divorced and have legal custody of your eligible dependent child, you may deposit from $100 to $5,000 in the Dependent Care Flexible Spending Account each calendar year. If you do not have legal custody, you are not eligible for the Dependent Care Flexible Spending Account.

Company Contribution: Tufts Health Plan provides the first payroll contribution for employees who earn less than $70,000 per year. This could be worth up to $192, depending upon your total election. 

It is important to remember that your annual deposit election is irrevocable. This means that once you have made your deposit election for the coming calendar year, you cannot change this election unless you have a qualifying Change in Status (see the Eligibility and Plan Participation section for examples).

FORFEITURE
It is important for you to make a careful estimate of the unreimbursed health care and/or dependent care expenses that you expect to have before you make your Flexible Spending Account election(s). 

If the eligible expenses that you submit for reimbursement are less than the amount you elected to deposit for a given calendar year, you will forfeit the unused portion of your account balance. See the Health Care and Dependent Care Flexible Spending Account Reimbursement sections for additional information on reimbursement deadlines and forfeitures.

The plan’s forfeiture rules are required by IRS regulations. Any amounts that are forfeited by participants will be used to reduce the plan’s administrative expenses. 

TAX ADVANTAGES
Deposits to your Flexible Spending Accounts are made in before-tax dollars. This gives you important tax advantages, because: 

  • your account deposits come out of your pay before federal, Social Security, and (in most cases) state and local taxes are applied; and
  • you do not have to pay taxes on the money you withdraw from your accounts to pay for eligible expenses. 

Participation in the Flexible Spending Accounts can lower your taxable income. For example, suppose your annual pay is $35,000 and you elect to deposit $1,000 into your Dependent Care Flexible Spending Account during a given calendar year. Your W-2 earnings statement for that year would report a taxable income of $34,000 (instead of $35,000). In other words, 

            Annual Pay                                          Your Account Deposit                                 Your Taxable Income
             
$35,000                     less                              $1,000                                =                           $34,000

During the year, you can draw on your Dependent Care Flexible Spending Account to pay for up to $1,000 of eligible expenses in tax-free dollars.

Other Plans: Your Flexible Spending Account deposits will not reduce your benefits from other salary-based plans, such as life insurance and disability insurance. 

It is important to remember that the tax treatment and amount of your Flexible Spending Account deposits are determined by government regulations. In addition: 

  • the plan complies with all applicable state laws regarding the taxation of Flexible Spending Account deposits; and
  • your deposits for a given year will reduce your FICA (Social Security) wages for that year. This may result in a small reduction in your Social Security benefits when you retire.

USING YOUR ACCOUNTS
You can use your Flexible Spending Accounts to pay for: 

  • eligible health care expenses incurred during a given calendar year and the first 2-1/2 months (up to March 15) of the following year; and
  • eligible dependent care expenses incurred during a given calendar year.

(For a listing of eligible expenses, see the Health Care Flexible Spending Account Reimbursement and Dependent Care Flexible Spending Account Reimbursement sections.) 

An FSA Card is available for eligible health care expenses (see Health Care Flexible Spending Account Reimbursement for details). To make a claim for other eligible expenses, you must submit a properly completed claim form and proof of payment for the expense. 

Once your claim is approved, you will be reimbursed from the appropriate account. 

To ensure the security of your personal information and simplify the management of your Flexible Spending Accounts you may submit claims using online forms on the Flexible Spending website at www.flexdirect.adp.com. You do not need to enter your name, address or any other personal data. The online tool will automatically create a unique document for you in which all your personal data is embedded within an encrypted barcode. Also, a random ID number will be provided to you. This number will be used on all FSA forms, removing the use of a Social Security Number and its associated risks. 

Claim Filing Deadline
The deadline for filing a claim for eligible Flexible Spending Account expenses is March 31. In other words, you have until March 31 of each year to submit your claims for services provided during the previous calendar year*. 

*And the first 2-1/2 months (up to March 15) of the following year for health care claims (see Claim Filing Deadline in Health Care Flexible Spending Account Reimbursement for details) 

The procedures for filing Flexible Spending Account Plan claims are described under Filing Your Claim.

DEFINITION OF “INCURRED EXPENSE”
For Flexible Spending Account purposes, an expense for a covered service is considered to be incurred on the date the service is provided, even though you may pay for it later. For example, assume that: 

  • you have elected to participate in the Dependent Care Flexible Spending Account during the 2017 calendar year;
  • you use an eligible day care service in December 2017; and
  • you pay the provider’s bill for this service in January 2018. 

Since the expense for the above day care service was incurred in 2017, you may use your 2017 Dependent Care Flexible Spending Account deposits to pay for it.