Flexible Spending Account (FSA)
NEW for 2014 the Department of Treasury announced a major policy change that will impact Flexible Spending Account (FSA) plans. In what is being hailed as a hugely positive development for administrators, employers, and FSA participants, the Treasury has modified the “use it or lose it” provision to allow for a limited rollover of FSA funds.
Effective for the 2014 plan year, employers will have the option to allow FSA plan participants to roll over up to $500 of unused funds at the end of the plan year. Effective immediately, employers with an FSA plan that does not include a grace period will have the option to allow current FSA plan participants to roll over up to $500 of unused funds at the end of the 2013 plan year.
Medical – Flexible Spending Account:
Examples of What’s Covered Under A Medical Savings Account:
- Deductibles & Co-Insurance Payments for Both Medical and Dental
- Office Visit, Emergency Room, & Hospital Co-Payments
- Birth Control Pills
- Chiropractic Care
- Acupuncture
- Educational Aids For Handicapped Individuals
- Eye Exams, Glasses, Contact Lenses, & Solution
- Lasik Eye Surgery
- Hearing Aids and Batteries
- Infertility Treatment
- Orthodontia
- Orthopedic Shoes
- Physical Therapy
- Prescription Drugs & Co-Pays
- Psychiatric/Psychologist/Social Worker Counseling
Example: John is married, earning $40,000.00 per year, with two children and has $1,000.00 of out-of-pocket medical expenses.
Without an FSA | With an FSA | |
Annual Salary | $40,000.00 | $40,000.00 |
Pre-tax deferral | -$0 | – $1,000 |
Taxable Income | $40,000 | $39,000 |
Taxes* | -$14,000 | -$13,904 |
Medical Expenses | -$1,000 | -$0 |
Take Home Pay | $24,740 | $25,096 |
John’s Net Cost $644
Dependent FSA Accounts reduce dependent care cost for both employers and employees. As tax rates go up, savings increase.
- Deductibles & Co-Insurance Payments for Both Medical and Dental
- Office Visit, Emergency Room & Hospital Co-Payments
- Birth Control Pills
- Chiropractic Care
- Acupuncture
- Educational Aids For Handicapped Individuals
- Eye Exams, Glasses, Contact Lenses & Solution
- Lasik Eye Surgery
- Hearing Aids and Batteries
- Infertility Treatment
- Orthodontia
- Orthopedic Shoes
- Physical Therapy
- Prescription Drugs & Co-Pays
- Psychiatric/Phychologist/Social Worker Counseling
Example: John is married, earning $40,000.00 per year, with two children and has $1,000.00 of out-of-pocket medical expenses.
Without an FSA | With an FSA | |
Annual Salary | $40,000.00 | $40,000.00 |
Pre-tax deferral | -$0 | – $1,000 |
Taxable Income | $40,000 | $39,000 |
Taxes* | -$14,000 | -$13,904 |
Medical Expenses | -$1,000 | -$0 |
Take Home Pay | $24,740 | $25,096 |
John’s Net Cost – $644
Dependent FSA Accounts reduce dependent care cost for both employers and employees. As tax rates go up, savings increase.