Flexible Spending Accounts

Flexible spending accounts allow you to set aside pre-tax dollars for eligible healthcare (HCFSA) and dependent care (DCFSA) expenses.

What it Covers
The HCFSA reimburses you for eligible healthcare expenses your plan doesn’t cover, including copays and deductibles. The DCFSA reimburses you for the care of your dependents.

This table summarizes some of the most commonly reimbursed items. A full list of eligible items is available here for HCFSA and here for DCFSA.

 Healthcare Flexible Spending Account (HCFSA) Dependent Care Flexible Spending Account (DCFSA)
  • Copays, coinsurance, deductibles
  • Prescription drug costs
  • Medical equipment (bandages, diagnostic devices, crutches)
  • Insulin
  • Family planning (birth control, fertility enhancement)
  • Eyeglasses, laser eye surgeries, contact lenses
  • Childcare for children under age 13
  • Preschool expenses
  • Summer day camps
  • Adult daycare centers
  • Home care specialists 


How it Works
You have the option of putting aside money in one or both types of flexible spending accounts and using it for eligible HCFSA and DCFSA expenses. 


Contributing

Each year during our fall open enrollment period, you determine which account you want to use and how much to put aside in each, up to the allowed maximum:

HCFSA maximum annual contribution:      2018: $2,650
DCFSA maximum annual contribution:      2018: $5,000 ($2,500 if married and filing separately)

Your contributions are deducted from your gross pay, reducing your taxable income.


Important Contributing Rules!
  • Because your HSA covers medical expenses, you can’t be enrolled in both the Cigna HSA Plan and an HCFSA. Instead, you can contribute tax-free to a Limited Purpose Healthcare FSA that covers eligible dental and vision expenses. 
  • To be eligible to contribute to and use a DCFSA, both parents need to be working, attending school, or seeking employment. Also, if you are married, keep in mind the $5,000 is a combined limit, even if you and your spouse each have access to a separate FSA through your employers.
  • HCFSA enrollment is different from the DCFSA. If you enroll in an HCFSA, the 2018 $2,650 limit is per person per year, even if you are married and your spouse has access to an FSA through his or her employer. You can also use the money from either your or your spouse’s FSA for any family member, including your children through the year they turn age 26 (regardless of whether they are covered under your medical plan).
  • Your choices don’t carry over from one year to the next. You can change how much you contribute each year. You can also change how much you’re contributing if you experience a change in life circumstances.
  • The annual FSA maximum contributions may be revised periodically based on the results of mandated plan non-discrimination tests.
  • You can contribute the full $2,650 in 2018 to an HCFSA plan (or up to that amount as you choose), even if you have contributed to a prior employers HCFSA plan in those years. The annual limit is independent from each employer offering HCFSA. However, please keep in mind that if you enroll in the DCFSA, that plan is limited to a total $5,000 among all employer plans you contribute to in that calendar year.

Using Your WageWorks Healthcare Card

You can skip the hassle of filing a claim with the WageWorks Healthcare Card. This card is tied to your account and can be used to pay directly and immediately for eligible expenses at select pharmacies, healthcare providers, and general merchandise stores.

Find out more about how this card works and its various benefits.



Filing a Claim

If you choose not to use the WageWorks Healthcare Card or need to file a claim for an eligible dependent care expense, follow these steps:
  1. Log into WageWorks.
  2. Click “Submit Receipt or Claim.”
  3. Follow the remaining steps, depending on the type of claim (e.g., debit card substantiation, paying a provider directly, or reimbursing employee).

Important Filing Rules!
  • These accounts have a “use-it-or-lose it” rule. You forfeit any money left in your account at the end of the plan year. Netflix has established a grace period, which means you have until March 15 following the end of the plan year to incur expenses and until March 31 to file for reimbursement of all your claims.
  • You can file an HCFSA claim for the full amount you’ll contribute in a year even if you haven’t contributed all the money at the time of filing. The DCFSA doesn’t allow for this. With the DCFSA, you can file for reimbursement only with the money currently available in your account.

The Tax Benefit of an FSA


You don’t pay taxes on the amount contributed to your HCFSA and DCFSA. Here’s an example of how this tax benefit saves you money.

 Without HCFSA With HCFSA
Your gross annual pay
$100,000
Your estimated tax rate (35%)
- $35,000
Your net annual pay
= $65,000
Your annual medical care expenses for 2018
- $2,650
Your final net annual pay
= $62,350
Your gross annual pay
            $100,000
Your annual medical care expenses for 2018             
- $2,650
Your adjusted gross annual pay
= $97,350
Your estimated tax rate (35%)    
- $34,073
Your final net annual pay
= $63,278

Savings: $928 with HCFSA
The IRS tests flexible spending accounts each year to ensure that employees considered highly compensated (earnings over $120,000 in the prior year) aren’t more advantaged by certain benefits than non-highly compensated employees. For example, where you may have elected a $5,000 DCFSA, if the testing detects an imbalance it’s possible some of the $5,000 pre-tax dollars could be shifted to after-tax dollars on your W-2.

You may wish to speak with a tax advisor since a two-income family with one spouse making less than $120,000 may want to consider that spouse funding the HCFSA and/or DCFSA.