FLEXIBLE SPENDING ACCOUNT
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The Flexible Spending Account (FSA) plan with Meridian Healthcare allows you to set aside pre-tax dollars to cover qualified expenses you would normally pay out of your pocket with post-tax dollars. The plan is comprised of a health care spending account and a dependent care account. You pay no federal or state income taxes on the money you place in an FSA.
How an FSA works:
The Healthcare FSA allows you to fund your out-of- pocket medical, dental and vision expenses, such as copays and deductibles, with pre-tax dollars. Meridian Healthcare allows a voluntary contribution of up to $3,050 per plan year into your healthcare (FSA) expense account.
Flexible Spending Accounts (FSAs) should only be considered for anticipated expenses. You should be conservative when estimating an amount to contribute to each account. For a small percentage of participants, Social Security retirement benefits may be affected by participating in FSAs. Participation in this plan reduces your W-2 income.
Important rules to keep in mind:
- The IRS has a strict “use it or lose it” rule. If you do not use the full amount in your FSA, you will lose any remaining funds.
- Once you enroll in the FSA, you cannot change your contribution amount during the year unless you experience a qualifying life event.
- You cannot transfer funds from one FSA to another.
- Participants that enroll in a Health Savings Account are not eligible for the Healthcare FSA.
How a Dependent Care FSA works:
This account allows you to fund the costs of dependent care on a pre-tax basis. The care must be provided by a dependent care center or by an individual who can provide a name, address, and taxpayer identification number. You may contribute up to a maximum of $5,000 each year, per household.
You can use your account throughout the year to help pay for eligible expenses; funds must be in the account before being reimbursed. Your expense must be for the purpose of allowing you and, if married, your spouse to work.
If you are married and file a joint tax return, your combined maximum election amount is $5,000. If you are married but filing separate tax returns, the maximum amount is $2,500.
A dependent care FSA helps reimburse you for the work-related cost of care for a qualifying dependent. A qualifying dependent is:
- A tax dependent of yours who is under age thirteen (13);
- Any other tax dependent of yours, such as an elderly parent, who is physically or mentally incapable of self-care and has the same principle residence as you; or
- A spouse who is physically or mentally incapable of self-care and has the same principle residence as you.
