The carryover increases to $550 at the end of 2021. It replaces the grace period for healthcare FSA balances. How FSAs work View this PowerPoint for more details on how FSAs work and why this may be a great option for you. You especially should view this if you’ve never participated in an FSA before. FSA’s are a great benefit. By doing a little bit of planning, you can save on your taxes. Consider this: if you are in a 30% tax bracket, an FSA is like saving 30% on medical and daycare expenses.Įxplains the carryover option that went into effect the 2015 plan year. You have to re-enroll each year to keep participating. Thirdly, your election is only good for the year, meaning it automatically ends on December 31. Secondly, any money you have in your account after the plan year closes is forfeited, with the exception of $550 in a Healthcare FSA that can be carried-over at the end of 2021. The list of qualifying events for a Healthcare FSA is particularly short – marriage, divorce, birth and death. You can’t change or cancel your FSA mid-year unless you’re within a month of a qualifying event. First, once you elect to contribute to an FSA, you’re locked into it for the year. The IRS determines which expenses can be reimbursed by an FSA. Is there a risk?Īs with most tax-favored benefits, there are some risks. You can use your Health Care FSA (HC FSA) funds to pay for a wide variety of health care products and services for you, your spouse, and your dependents. Note that if you participate in a Dependent Daycare FSA, you are not eligible to take the childcare credit for the same expenses when you file your tax returns. But this account is used to reimburse yourself for childcare/daycare expenses that are needed because both you and your spouse work. Just like a Healthcare FSA, whatever you elect is deducted from your paycheck over the year, on a pre-tax basis. You may set aside as much $5,000 for the plan year, reduced to $2,500 if you are married and don’t file a joint return. IMPORTANT: Employees who enroll in the UA Health Savings Plan (a qualified high deductible plan) are NOT eligible to participate in a Healthcare FSA. ![]() You can also use it to pay your copays, deductible and coinsurance under your medical and dental plans. Many employees use a Healthcare FSA to pay for contact lenses and glasses (if not paid under Vision) and orthodontia. Or you can use your FSA debit card to pay for your expense directly from your FSA. Then you file claims to reimburse yourself from your account (funded with your money) when you have eligible healthcare expenses. Whatever you elect is deducted from your paycheck evenly throughout the year on a pre-tax basis. You can set aside as little as $120 or as much as $2,750 for the 2021 plan year. We offer two FSA plans: Healthcare and Dependent Daycare. When you participate in an FSA, you reduce your taxable income by the amount you anticipate you’ll spend out-of-pocket for eligible healthcare and daycare expenses. UMR is our FSA plan administrator.Īn FSA allows you to set aside pre-tax dollars to pay for eligible out-of-pocket expenses. Do you have predictable healthcare or daycare expenses? If so, a Flexible Spending Account, or “FSA”, can save you money.
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