Flexible Spending Accounts

Flexible Spending Accounts allow you to save taxes on the money you spend for uncovered medical/dental and/or dependent care expenses. You can set aside money through payroll deductions during the calendar year to pay for predictable expenses, and amounts are deducted from your gross pay before federal, state and Social Security taxes are withheld. Because you pay no taxes on your FSA deposits, you effectively increase your spendable income over the year.

• Two accounts are available: a Medical/Dental Account and a Dependent Care Account. During Open Enrollment each fall, you decide the total amount you want deposited into either or both of the FSA accounts for the next calendar year. That amount is deducted from your paychecks in equal increments throughout the year.

• Once you choose your FSA deposit amount, you may not change or stop your deductions during the year unless your family status changes (due to marriage or birth of a child, for example), and the action must be consistent with the status change.

• The Medical/Dental Account is used to pay for any medical and dental expenses that are not covered by insurance plans. Some of the expenses eligible for reimbursement are: deductibles and copayments under health insurance and dental plans; orthodontic care; chiropractic care; eyeglasses and contact lenses. Even many over-the-counter medications can be covered by the FSA plan. The IRS has indicated that expenses for solely cosmetic reasons or for the maintenance of general health are not eligible expenses for medical care. Such non-covered expenses include, but are not limited to, smoking cessation classes, nicotine patches, nicotine gum, and rogaine. Premiums you pay for medical and dental coverage, whether for yourself, your spouse, or a dependent, are not eligible expenses. The maximum contribution is $4,000 per year, and the minimum is $100 per year.

• The Dependent Care Account is used to pay for certain dependent care expenses incurred because you (and your spouse, if married) are employed. Eligible expenses include charges for the care of dependent children age 12 and under or for elderly or disabled family members who are dependent on you for financial support. The maximum annual contribution is $5,000 and may be less under certain circumstances (e.g., the limit is $2,500 if you are married filing separately).

• Claims for eligible expenses are handled by a third-party administrator (WageWorks) under several options:

“Pay Me Back” Claim Forms are available on the WageWorks website or from the Benefits Office and may be used to submit claims for reimbursement from both FSA accounts.

“Debit Card” With the WageWorks Health Care Card (a “debit card” for health care expenses), you will often be able to simply swipe the card to pay for prescription and office co-pays, or to make health care-related purchases at qualified merchants (pharmacies, optometrists, etc.)

“Pay My Provider” Option You can often instruct WageWorks to pay your provider directly from your FSA account. This feature is particularly useful for Dependent Care expenses. (The amount must be in your account in order for the payment to be made.)

• Under a “grace period” provision any unused account balance at the end of the calendar year may be carried forward for up to 2 ½ months into the following year. During that period you will be able to incur expenses and submit claims using available funds from the previous year’s account. Accounts will then remain open for an additional three months after the “grace period” to allow more time to submit claims for expenses incurred during the previous calendar year and the grace period.

• You cannot switch funds between accounts.

• If you terminate employment or go on an unpaid leave of absence, your deductions will stop and you may not submit claims for services incurred after your termination date or LOA start date, unless you continue to make the same monthly contributions by personal check through the Benefits Office (for the Health Care Account only). When you return from an unpaid leave of absence, you may resume deductions for the rest of the plan year.

• IMPORTANT: Once the period for submitting claims expires, any funds remaining in your accounts must be forfeited, in accordance with Internal Revenue Service regulations. This is called the "use it or lose it" rule. Therefore, it is important to estimate your expenses carefully when you enroll in the plan.

You are eligible to participate in the FSA plan if you are in a benefits-eligible employee position.

New employees may enroll in the plan within 60 days after their hire date for the remainder of that calendar year. Coverage is always effective the first of a month. Enrollment forms for new employees are available from the Benefits Office. Employees who don’t enroll during their first 60 days normally will not be able to enroll until the next open enrollment period.

Each fall there is an Open Enrollment period for the next plan year beginning January 1. Enrollment during that period is conducted on-line or by phone directly with WageWorks. If you are eligible to participate and you do not enroll during the Open Enrollment period, you normally will not be able to enroll until the next open enrollment period. If you have questions, please call the Benefits Office at x2-3329 or send an e-mail to benefits@bc.edu.