A Flexible Spending Account (FSA) is a benefit your employer provides that allows you to pay certain health care, dependent care expenses, mass-transit and parking with pre-tax money. You will not pay any federal, Social Security, and, in most cases, state or local taxes on the funds you allocate into the plan. You can save an estimated $20 to $40 on every $100 you elect to defer. The amount of your savings will depend on your federal state, and local tax brackets. It is important that you understand how FSA’s work in order to maximize their valuable advantages. This guide will help you understand these accounts, their rules, reimbursement procedures, and the election process.
Great News! You now have the option of paying for most FSA expenses with the SenecaCard Debit Card. Please see your HR Representative for participation eligibility and plan year election guidelines. Once you have enrolled in an FSA, you may not make any changes to your election unless you have a change in family status, such as:
Marrage, Divorce, Birth or adoption, Change in Spouse's employment status, Death, FMLA.
Using Your SenecaCard Debit Card
The card will work at qualified merchants such as doctor’s offices, hospitals, pharmacies (at the pharmacy counter), opticians and optometrists, chiropractors and other healthcare providers as well as day care providers. It will not work at restaurants, retail stores, etc. Simply present the SenecaCard at time of payment to make qualified purchases. The provider will be paid and your account balance will be automatically adjusted. Please note that if the amount swiped exceeds the account balance, the transaction will be declined. For example if you attempt to swipe $150 and your account balance is only $140 it will decline. You can swipe for $140 and pay the remaining $10 out of your pocket.
The IRS does require that you keep all receipts for all expenses, regardless of the method of payment. Usually, when you pay with your MediCard at a pharmacy or physician’s office, receipts are not required for co-payments If a receipt is required, Seneca / TPA Exchange will send a letter to your home or an e-mail to your e-mail address on file, requesting that specific receipt. You will need to fax, mail, or scan/email the receipt(s) being requested within 14 days of receiving the letter.
Healthcare Reimbursement Account
Almost everyone has necessary and predictable expenses that are not covered by their insurance programs. The Health Care Reimbursement Account will help you pay for these predictable expenses. With this account, you can pay out-of-pocket health care expenses for yourself, your spouse and all of your dependents for health care services that are incurred during your plan year and while an active participant. Your eligible health care expenses can be reimbursed regardless of whether you or your dependents are covered by a medical or dental plan sponsored by your Employer.
Ineligible Expenses – Some expenses that you incur during the year may not be eligible for reimbursement under current IRS regulations
Dependent Care Reimbursement Account
Eligible dependents must be claimed as an exemption on your tax return. These dependents can include stepchildren, grandchildren, adopted children, or foster children. In a divorce situation, you must have custody of the child in order for the child to be considered an eligible dependent. Eligible dependents are further defined as:
Under age 13
Physically or mentally unable to care for themselves, such as: Disabled spouse, Disabled child or Elderly parents that live with you.
For dependent care expenses to be eligible for reimbursement you must be working during the time your eligible dependents are receiving care. If you are married, your spouse must be either:
Working at the time services are rendered
Full-time student for 5 months during the year
Mentally or physically disabled and unable to provide care for himself or herself
In the event of divorce, the non-custodial parent cannot make a claim unless they have custody 6 or more months per year.
The annual maximum contribution may not exceed the lesser of the following:•$5,000 ($2,500 if married filing separately)•Lesser of you or your spouse’s yearly wages. The maximum is reduced by spouse’s contribution to a Dependent Care FSA.
You will only be reimbursed for up to your account balance at the time you submit your claim. If your claim is for more than your account balance, Seneca / TPA Exchange will track the unreimbursed portion of your claim. You will be automatically reimbursed as additional deductions are taken and deposited into your account, until your entire claim is paid out.
How to Receive Reimbursement
To obtain reimbursement from your Dependent Care Account, you must complete a claim form and attach itemized receipts that include:
Name of Dependent Receiving Care
Dates of Service
Name of Service Provider
Provider’s Social Security number or Tax ID Number
Canceled checks, bankcard receipts, credit card receipts, and credit card statements are NOT acceptable forms of documentation. You are responsible for paying your provider directly.
Eligible dependent care expenses are those expenses you must pay for the care of an eligible dependent, so that you and your spouse can work. The care may be provided either in your home or at a licensed center outside of your home. If the care is provided in your home, then the service cannot be provided by a child of yours underage 19, by your spouse, or by your dependents. If the care is provided outside of your home, the facility must be in compliance with all applicable state and local regulations.
For a complete list of eligible expenses, see IRS Publication 503 “Dependent Care Expenses.”
2013 Transit and Parking
The Transportation Equity Act allows you to save tax on your transit and parking expenses related to your daily work commute. You can save tax on out of pocket parking and commuting expenses you incur by allocating on a pre-tax basis to a parking and/or transit account. The IRS limits the amount of money you and contribute to and be reimbursed from these types of accounts. Below are the current limits:
Parking—$240 per month
Transit—$125 per month
If you do not spend the $ you set aside for these accounts, you may carry it forward to a future month. Any $ remaining in the account upon termination may be forfeited.
Parking—Costs for parking at mass transit facilities, parking lots at or near your work or where you park to access a van/carpool.
Transit— Vanpools and mass transit costs, such as trains, subways or buses.
What happens to the money that an employee puts into the Transit Reimbursement Arrangement?
For commuter highway vehicle transportation and qualified parking expenses, the employee’s redirected salary is "banked" by the employer in an account maintained for the employee. Qualified parking expenses incurred by the employee are reimbursed tax-free from dollars "banked" in the account.
If the full amount is not used by the employee before the end of the program year, the left over amount is carried forward to the next year.
FSA Plan rules
All pre-tax FSA funds that are not used for eligible expenses incurred during the plan year will be forfeited. This is mandated under the IRS “use it or lose it” rule. To avoid forfeiture, you should plan carefully. At the beginning of a plan year, you will have a grace period to submit all of your claims for expenses incurred during the prior year.
All claims received by 5:00pm Friday are paid the following week. You will receive a reimbursement check mailed to your home.
Minimum Check Amount
The minimum reimbursement check is $10.00 with the exception of end-of-year claims, which are processed for 90 days after the end of the plan year
IRS regulations do not allow money to be transferred between reimbursement accounts. You cannot transfer unused funds from Health Care Accounts to Dependent Care Accounts or vice versa.