Flexible Spending Accounts

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A flexible spending account (FSA) is a program that permits benefits-eligible faculty and staff to pay for unreimbursed medical, dental, vision care, or dependent care expenses with pre-tax dollars through payroll deduction. The money deposited into these accounts is not taxed at the time of contribution, and remains tax-free when it is withdrawn as reimbursement for appropriate expenses.

There are two types of flexible spending accounts: medical/dental and/or dependent child/elder care. Although it is possible to have both accounts, money cannot be transferred from one account to the other.

Once an FSA account has been opened, the employee is committed to that decision for the plan year.  The only exception is a qualifying Change in Status.

Under government regulations, unused money in these accounts at the end of the calendar year is forfeited.

A.     Medical/Dental Care Flexible Spending Account

This account can be used to pay eligible medical, vision, and dental expenses including deductibles and co-payments not covered under any other plan.

Eligible Expenses for Medical/Dental FSA include, but are not limited to (please reference http://www.irs.gov/pub/irs-pdf/p502.pdf, for full listing of eligible expenses):

• Acupuncture - Performed by a licensed practitioner
• Alcoholism or Drug Dependency - Payment to a treatment center
• Ambulance
• Analysis - Psychotherapy by a licensed practitioner
• Birth control pills
• Chiropractors - Services within scope of license
• Contact lenses, including contact lens solution
• Deductibles and Copayments - Balance not paid by other medical coverage
• Dental fees, x-rays, fillings, braces, extractions, false teeth, treatments, orthodontic care, etc.
• Doctors' fees
• Eyeglasses, lenses, frames, exams
• Hearing aid
• Health care equipment - Not for general use articles of furniture, household items, or appliances
• Learning Disability - Tutoring by licensed school or therapist for child with severe learning disability
• Medicines - Prescribed and legally obtained drugs and medicines
• Nursing Home - Confinement for treatment of illness or injury
• Nursing Service - By registered nurse or licensed practical nurse for medical care
• Optometrist - Services within scope of license
• Oxygen
• Physical Therapy
• Radial Keratotomy
• Stop-smoking - You can include in medical expenses amounts you pay for a program to stop smoking. However, you cannot include in medical expenses amounts you pay for drugs that do not require a prescription.
• Vaccinations and Immunizations
• Vitamins and Mineral Supplements - Prescribed for treatment of illness

B.     Dependent Child/Elder Care Flexible Spending Account

This account is for the purpose of paying for eligible dependent/elder care expenses (such as child or parental care) that enables you to work.

Dependent care expenses are eligible for reimbursement if they meet the following criteria (please reference http://www.irs.gov/pub/irs-pdf/p503.pdf for full description of eligible expenses):

• The annual amount submitted for reimbursement does not exceed the lesser of your income or your spouses income
• The expenses are necessary to enable you to work
• Your dependent is under age 13 or is physically or mentally incapable of caring for him/herself
• Your dependent is eligible to be claimed as a dependent on your Federal Income Tax Return
• Your dependent resides in your home for at least eight(8) hours per day
• Your payments are not made to a person you claim as a dependent
• If the services are provided by a dependent care center that provides care for more than six individuals (other than a resident of the facility), the center must comply with all state and local laws

NOTE: When filing Federal Income Tax Return you will be required to supply the name, address and taxpayer identification number of the dependent care provider.

Dependent Care Tax Credit vs. Dependent / Elder Care FSA

Certain dependent care expenses qualify for a tax credit on the employee's federal income tax return.  Most of these expenses can also be used in conjunction with a tax-free dependent/elder care FSA.  Employees are not permitted to claim the same expenses in both places.  It is a good idea to weigh the advantages of both tax savings plans in detail before determining which option is most advantageous.

C.     How to Use Funds in These Accounts

Medical/Dental Care Flexible Spending Account

Starting January 1, 2004 using your Flexible Spending Account for Health Care will be easier than ever. When you enroll in an FSA your annual contributions are credited to an account in your name and you will receive a debit card for this account. Whenever you need eligible services or products simply pay for them using the debit card. It is issued by VISA, so the card is accepted wherever you see the VISA logo.

In the event the card is not accepted by your provider, employees pay for them, submit Reimbursement Request Form (available at: http://www.unh.edu/hr/pubs-frm.htm) with receipts directly to Wage Works.

Because the debit card is issued with the total annual balance selected at the time of enrollment, that total amount will be available even if you have not contributed the full amount to your FSA.

Dependent Care Flexible Spending Account

Dependent Care funds are accessed in two ways:

1. As eligible expenses arise over the course of the year, employees pay for them, submit a Reimbursement Request Form (available at: http://www.unh.edu/hr/pubs-frm.htm) with receipts directly to Wage Works.

OR

2. When you enroll in a dependent care FSA, you will be able to take advantage of the reoccurring payment option, where checks are mailed directly to your caregiver. Information and enrollment for this method of payment is available at www.wageworks.com

If the Dependent Care FSA does not contain sufficient funds to cover the expenses, reimbursement will be made up to the current account balance. The outstanding reimbursement will be made at a later date.

• Minimum reimbursement:  $25, except in March, when the last reimbursement for the previous calendar year is made
• FSA checks are mailed on a monthly basis
• All reimbursements will be made payable to you
• Each reimbursement check stub is a statement of account
• Statements of account will be issued quarterly if no claims have been submitted. Fourth quarter statments will be issued one month before the end of the plan year.

D.     Reimbursement through Direct Deposit

Reimbursements from your Flexible Spending Account can now be direct deposited into your bank account. Go to www.wageworks.com. Register as a Participant by setting up a user name and password. Once signed in, go to Edit My Profile and Reimbursement Payments where you can choose to Make Reimbursement Payments by Direct Deposit.

Additional information is available at www.wageworks.com or by calling Customer Service at: 877-924-3967 (6:00am to 5:00pm EPT).