Flexible Spending Accounts - Health Care & Dependent Care
The Johnson County Community College Flex Benefit Plan offers two separate flexible spending accounts (FSAs).
The Health Care FSA is an account from which you can request reimbursement for out-of-pocket health care expenses not covered by your medical, dental or vision plans, for you and/or your eligible dependents.
The Dependent Care FSA is an account from which you can request reimbursement for child care and/or dependent custodial care expenses for eligible dependents.
A major advantage of the flexible spending accounts is the ability, through salary reduction, to pay for eligible expenses with before-tax dollars. This means if you set aside a portion of your salary into an FSA, the expenses are reimbursed with pre-tax dollars. The average tax savings for monies set aside in a Flexible Spending Account is 25%. Another way to look at it is that, each dollar you put in an FSA saves you twenty-five cents ($0.25) you would otherwise be paying in taxes.
Consider the following example. Assume you are in the 20-percent (20%) tax bracket and have $1,000 of eligible health care or dependent day care expenses to pay. If you did not use an FSA, you could pay these expenses from a portion of your salary, which is taxed. This means you must earn $1,250 to pay $1,000 of expenses, because the 20% tax on $1,250 is $250. By using the FSA, you only need to earn $1,000 to pay the expenses and you save $250 in taxes.
Each year when you make your Flex Benefit Plan choices, you can elect to put money into one or both of these accounts. The money can come from the flex benefit credits provided by the College, from pre-tax contributions you make through a salary reduction agreement or from a combination of both. These monies are then used to reimburse you for eligible expenses from each flexible spending account. In most cases, an employee's flexible spending account money may not be used to reimburse health care expenses for a same sex domestic partner, even if the college provides other domestic partner health benefits.
Currently, you may elect to contribute a maximum of $2,600 per employee, to the Health Care FSA for the benefit plan year that runs from June 1 through May 31, plus an additional 2½-month “Grace Period”. The maximum amount that can be set aside in the Dependent Day Care FSA is $5,000 per calendar year per family. For instance, if your spouse is participating in a similar plan with another employer, there is an overall annual limit of $5,000 -- for both of you together -- when filing a joint tax return. The benefit plan year for the Dependent Care FSA runs from June 1 through May 31, plus an additional 2½-month Grace Period. The Grace Period ends on August 15th of each benefit plan year and you have until September 30th to turn in eligible expenses attributable to the benefit plan year plus the Grace Period.
PLEASE NOTE: It is important that you properly estimate your expenses for the Health Care FSA and Dependent Day Care FSA and submit them timely. Any unused amounts at the end of the benefit plan year plus the Grace Period that are not submitted by September 30th will be forfeited and cannot be refunded.
Additionally, the Internal Revenue Service requires that any amounts that are contributed to an FSA cannot be changed during a plan year unless there is a Qualified Status Change (such as a change to the employee's legal marital status, a change in the number of tax dependents or a change in dependent eligibility etc.).
If you, your spouse or eligible dependent experience a termination or commencement of employment, certain changes in work schedule, a change in eligibility status, a change in residence or worksite, a change in dependent day care providers and/or the cost of dependent day care or health care, notify the Office of Human Resources within 30 days, and you may be able to change your FSA benefit in an amount consistent with your Qualified Status Change.