Flexible Spending Accounts

A Health Care Flexible Spending Account allows you to set aside pre-tax dollars to pay for eligible out-of-pocket healthcare expenses that are not otherwise paid by any insurance plan covering you or your eligible dependents.

A Dependent Care Flexible Spending Account allows you to set aside pre-tax dollars to pay for eligible dependent care expenses that you (and your spouse, if any) incur in order to work. (You may also use this FSA is you are married and your spouse is a full time student or disabled.)

Because FSA contributions are exempt from FICA (Social Security) and both Federal and State Income taxes, most taxpayers save about 30% of the cost of eligible expenses when those expenses are paid through an FSA.


To qualify for an FSA's favorable tax treatment, you must designate the amount(s) to be set aside prior to the start of the plan year and you may not change your election unless you experience a change in family status.

If you set aside more money into either FSA than you receive in reimbursement for expenses incurred during the plan year, you will forfeit the balance of that account. You cannot receive a refund from an FSA and you cannot carry over funds to the next year.

The Health Care FSA and the Dependent Care FSA are separate accounts. Excess funds in one account cannot be redirected to pay excess expenses through the other account.

All services and supplies covered by an employer sponsored health plan to the extent that those expenses are not paid or reimbursed by the plan
Example:

Rx, OV & ER Co-pays

Deductible & Co-insurance

Charges in excess of plan maximums: e.g. Mental Health, Chiropractic

An eligible dependent is any dependent who is less than 13 years old and is your dependent under federal income tax rules. A mentally or physically impaired spouse or dependent (e.g. parent) may also qualify. The dependent must spend at least eight hours per day in your home.

Services may be provided inside or outside the home but not by your minor child or by someone else who is your dependent.

Services may be provided by a day-care facility but if the center cares for more than six children, it must be licensed.

Services must be for the physical care (not education) of the dependent and they must enable you (and your spouse, if any) to be employed.

You may contribute up to $5,000 into your Dependent Care FSA if you're single or married and filing a joint return, $2,500 if you are married and filing separately. You cannot set aside an amount greater than your spouse's income or one-half of your income, whichever is lower.