Flexible Spending Account & Pre-Tax Premium Contributions
A Flexible Spending Account (FSA) is a tax-free account that allows you to pay for essential health care expenses that are not covered, or partially covered, by your medical, dental and vision insurance plans, or to pay for child/dependent care expenses. By contributing a portion of your paycheck into an FSA on a pre-tax basis, you save on the cost of eligible expenses you are already incurring.
When you enroll in an FSA, you decide how much to contribute to the account for the entire plan year. The money is deducted from your paycheck pre-tax (before federal and state income taxes and FICA taxes are deducted) in equal amounts over the course of the plan year. After you incur expenses that qualify for reimbursement, you must submit claims (reimbursement requests) to ASI, the university's FSA administrator, to request tax-free withdrawals from your FSA to reimburse yourself for these expenses.
Using the FSA to pay for expenses can reduce your out-of-pocket costs significantly. Your personal savings will vary according to your net tax rate.
What is a Health Care FSA?
The Health Care FSA is an account that allows you to set aside pre-tax dollars to pay for out-of-pocket medical expenses for you, your spouse and any tax dependents. You can set aside up to $2,500 per year in the account. Your full annual election is available to you on your first day of coverage, which means that when you incur eligible expenses, you can submit reimbursement requests immediately.
Expenses can be for you, your spouse or any tax dependent, even if your dependents are not enrolled in the UM Medical, Dental or Vision Plans.
PLEASE NOTE: Effective January 1, 2011, new federal regulations will require that you submit a prescription in order for over-the-counter (OTC) medicines and drugs to be eligible for reimbursement through the FSA program. This regulatory change will impact items such as pain relievers, cold and allergy medicines, etc. OTC supply items such as diabetes test strips, contact lens solution, band-aids, etc. will not be affected, and will not require a prescription in order to be reimbursed.
What is a Dependent Care FSA?
The Dependent Care FSA allows you to use pre-tax dollars to pay for out-of-pocket childcare and/or elder care dependent expenses. You can set aside up to $5,000 ($2,500 if married and filing separately on your federal income taxes) per year (please note that the $5,000 is a household maximum) in the account. The funds are deducted before federal and state income taxes and FICA are assessed, and reimbursements are completely tax free.
Eligible expenses include day care, babysitting, general purpose day camps and pre-K expenses. Please note that you will be required to include your provider’s tax identification number or Social Security number with your reimbursement request.
Ineligible expenses include overnight camps; care provided by your tax dependent, your spouse or your child who is under the age of 19; and care provided while you are not at work.
For more information regarding FSA, review the resources below or visit the ASI website at www.asiflex.com.
- FSA Frequently Asked Questions
- FSA Mid Year Change Form (PDF 74 KB)
- Pre-Tax Payment of Insurance Premiums
- Claim Form (and instructions)
- Automated Account Balance and Reimbursements Infoline 125 (PDF 5 KB)