Flexible Spending Accounts
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2021 FSA Webinar: What to Know and Where to Go
This Flexible Spending Account webinar, co-led by University and Wex staff, will break down ways to use your FSA and keep it organized, as well as how to take advantage of 2021’s federal special opportunities.
Time: May 26, 2021 at 9 AM CT
2020 FSA Spending Extended Through December 2021
The grace period for spending 2020 FSA accounts is extended to December 15, 2021 and the deadline to reimburse yourself and submit receipts is extended December 31 due to a federal relief opportunity passed in response to COVID-19. These dates are extended from the upcoming March deadlines you may be accustomed to. FSAs are still a “use it or lose it” benefit where money is no longer available to you after the deadline, but this year, you have extra time due to federal legislation about COVID-19’s impact.
An extra perk for Dependent Care FSA members: as part of this relief package, unused 2020 FSA dollars can be used to reimburse for eligible care expenses for dependents up to age 14. Previously, only dependents under the age of 13 were eligible. Eligible expenses remain the same, and continue to include day camps.
By December 15, 2021: Finish your spending
You may spend remaining dollars in any 2020 FSA account (Health Care, Dependent Care, Limited FSA) until December 15. Find eligible expenses or check your FSA account balance.
By December 31, 2021: Submit your receipts for reimbursement
For any expense you “incur” (items or services you’ve received but haven’t done the FSA paperwork for yet), remember to submit your receipts by December 15 to “reimburse” (pay yourself back) from any other accounts you’ve used to pay at the moment.
What’s a Flexible Spending Account?
You can set up a pre-tax Flexible Spending Account (FSA) to pay for routine out-of-pocket health care or dependent care expenses.
As a new employee, you can enroll online through MyU within 30 days of your date of employment or your newly benefits-eligible job. Your Flexible Spending Account starts on the first day of the month following your first day in your new job.
Health Care FSA
You may contribute a minimum of $100 and a maximum of $2,750 from your pay before taxes each calendar year.
Eligible claims include any health care expenses not covered by your medical and dental plans, such as copays and deductibles. It also includes vision care expenses for prescription eyeglasses and contact lenses, as well as medicines that require a prescription. However, if you enroll in Medica HSA, your claims are limited to out-of-pocket costs for eligible dental and vision expenses.
Use the Discovery Benefits Eligible Expenses search to find out if an item or service is covered. That will help you decide how much to put into the FSA.
Dependent Care FSA
You may contribute a maximum of $5,000 per household from your pay before taxes each calendar year.
Use your pretax dollars to pay for eligible expenses provided by a qualified dependent care provider to care for your child, disabled spouse, elderly parent, or other dependent who is physically or mentally incapable of self-care, so you can work, or if you’re married, for your spouse to work, look for work, or attend school full time.
Use the Discovery Benefits Eligible Expenses search to find out what types of facilities are covered for dependent care services so you can decide how much to put into the FSA.
What’s the Benefit of an FSA?
- Gives you peace-of-mind. With the money set aside, you’ll be ready for large health-related costs such as new prescription glasses, or for your weekly daycare costs.
- Easy to use. You’ll receive a debit card for your health care FSA. It’s as easy to use as the bankcard you use every day. Or you can submit your health and dependent daycare claims online or by using a phone app.
- Saves money on taxes. A FSA saves you money by lowering the taxes deducted from your paycheck. Because your FSA contributions are taken out before taxes are considered, you lower your income and your tax payments too. FSA users save about 30 cents for every dollar deposited into their FSA, depending on their tax bracket.
Here’s an example that shows the tax savings:
|Annual Savings*||With FSA||Without FSA|
|FSA pre-tax contribution||($2,000)||$0|
|Federal Income, Social Security and Medicare taxes||($10,966)||($11,616)|
|After-tax dollars spent on eligible expenses||$0||($2,000)|
|Real Spendable income||$37,034||$36,384|
|Savings with an FSA||--|
* Sample tax savings for a single taxpayer with no dependents. Actual savings will vary based on your individual tax situation. Please consult a tax professional for more information.
- Find your potential savings. Use the personalized FSA calculator help you crunch the numbers to determine the amount of money to set aside from each paycheck and the amount of savings you’ll get back in return.
What is the 'Use It or Lose It' Rule?
Calculate your expenses and contributions carefully! If you do not use all of the money in your FSA for expenses incurred between the date your coverage is effective and the grace period deadline on March 15 of the following year, you lose the unused portion. All of your claims must be submitted by March 31 of each year. Special Exception: Due to a federal relief opportunity 2021, the grace period for 2020 FSA money has been extended to December 15, 2021 to incur expenses and December 31, 2021 to submit expenses.