Flexible Savings Accounts (FSAs)
What is an FSA?
A Flexible Spending Account (FSA) is a tax-advantaged savings account many employers in the United States offer. It allows you to set aside a portion of your pre-tax income to pay for qualified medical, dental, and dependent care expenses. It covers not just your medical expenses but also the expenses of your spouse, qualifying children, and qualifying relatives, depending on the type of FSA you’re enrolled in. Depending on your tax bracket, you may save up to 30 percent or more in taxes (“Health Care FSA.” FSAFEDS, www.fsafeds.com/explore/hcfsa. Sept. 2023).
How does an FSA work?
Enroll: During your employer’s open enrollment period, you can elect to participate in an FSA and choose the type of FSA you want (e.g., Health FSA, Dependent Care FSA, Limited Purpose FSA). You decide how much money you want to contribute to your FSA for the upcoming plan year, subject to any contribution limits set by your employer.
Pre-Tax Contributions: Elect an annual amount or contribution for your FSA. Look at your medical expenses from the previous plan year and estimate the medical, vision, dental, and/or dependent care expenses you may incur during the plan year. The money you choose to contribute to your FSA is deducted from your gross income before taxes are withheld. This reduces your taxable income, resulting in lower income tax and FICA (Social Security and Medicare) withholdings.
Funding: Your FSA contributions are deposited into your FSA account and are available for use on the first day of your plan year. In some cases, your employer may also contribute to employee FSAs.
Expenses incurred: Throughout the plan year, you can use the funds in your FSA to pay for eligible expenses. These expenses depend on the type of FSA you have. For example:
- Health FSA: You can use the funds to cover qualified medical and dental expenses, such as co-pays, deductibles, prescription medications, and more.
- Dependent Care FSA (DFSA): You can use the funds for eligible dependent care expenses, such as childcare or adult daycare costs.
- Limited-Purpose FSA (LFSA): This type covers specific expenses like dental and vision care.
Accessing funds: When you have eligible health care expenses, pay for them with your InComm Benefits card or out of pocket and request reimbursement through the InComm Benefits mobile app or website. Remember—always to keep your receipts.
Post, plan year spending options: Your employer may offer either a run-out period, a grace period, or a carry-over after the plan year ends to give you extra time to utilize any unused funds in your FSA. Details on each option can be found in subsequent FAQs, however, you will need to consult your HR department to learn which option your employer offers.
Cashback
What is the maximum cash back I can earn annually?
The maximum amount of cash back you can accrue for the calendar year is $200. A calendar year is considered January 1 – December 31. Once you have reached $200 in accrued cash back for the year, you will stop accruing cash back on transactions.
If I leave my employer and continue to use my HSA, will I continue to earn cash back on purchases?
Yes, your HSA belongs to you. Any purchases made with your InComm Benefits card will earn cash back, regardless of if you’ve left your employer.
What if I have a return? What happens to the cash back?
Returns will be processed against the original transaction, and the cash back will be adjusted based on the return amount. Cash back for returns will be taken from the accrued total, decreasing the cash back available for redemption.