Facts about FSAs
FAQ About Flexible Spending Accounts The AAUP-AFT contract provides for flexible spending and medical spending accounts. You should have all received notification from the University about these accounts. For additional information from the University, visit its website at http://www.hr.wayne.edu/tcw/benefits/bafsa.php. The website includes a useful Handbook on Flexible Spending Accounts. At the end of the Handbook is copy of the Application Form. You may also obtain a copy of the Application Form, in Adobe Acrobat, by clicking here. Here are some key answers to key questions.
Question> How much does it cost me? Answer> There is no charge. Under the contract between the University and the AAUP-AFT, the previous $51 per year administrative fee has been removed. This new feature enhances the tax advantage, particularly for those who would be spending even small amounts on care. Question> When do I make an election to participate in the FSA program? Answer> You must elect to participate for next year by the end of the enrollment period (enrollment period is October and November). Question> Isn't there a lot of paperwork? Answer> Less than you might think. In fact, for those with DMC Care, non-covered expenses are automatically sent to the flexible plan administrator and paid without any paperwork on your part. For other plans, there is a simple form to fill out and send in. In addition to clicking above, you can get the form by calling or writing to the firm that the University has engaged to administer the plan. Here are the particulars: Automated Benefit Services Question> I haven't kept my pharmacy receipts. What should I do? Answer> Give your pharmacist a day's notice and ask him or her for an itemized list of purchases to date. All pharmacies will provide you with these materials.
Question> I plan to incur some large expenses in January, and I will not have had enough money withheld from my salary to cover them. What can I do? Answer> Your full coverage is available from January 1. It is essentially an interest free loan from the government. So, you do can get reimbursed for expenses even before you have contributed the amount of the expenses, up to the maximum that will be withheld for the year.
Question> What happens to funds that are deducted from my salary but which I don't use because I did not have enough medical expenses for the year?. Answer> Under a new Internal Revenue Service rule, WSU employees enrolled in a Medical Care Flexible Spending Account will be allowed a grace period to March 15 of the next year to incur eligible medical expenses in order to file claims against unused balances from the previous year. WSU does not offer this extension to the Dependent Care FSA's. After this date, you lose those amounts in accordance with the provisions of the tax code. The surplus funds would go the the university to help defray the administrative expenses of the program.
Question> I am worried about losing the unused funds in my account. How can I keep this from happening? Answer> This is a valid concern. To be conservative, in computing the amount to have withheld, you should first calculate the most probable expenses including uncovered office and hospital co-payments, uncovered prescription co-payments, uncovered eyeglass exams and purchases, and uncovered dental expenses. If you spend money on these items each year, it is a safe bet that these expenses will continue. Also, if you keep track of the balance in your account, you can make some discretionary expenditures for medical services late in the year or during the new 2 1/2 month grace period. If you are thinking of getting new eye glasses, for example, you can make sure you get it done with your year-end balance to avoid losing the money. Question> Can you give an example of how the FSA works?. Answer> Yes. Assume that you spend $1,000 each year on medical services and supplies, and are in the 15% income tax bracket. By contributing $1,000, through withholding, to your FSA, your taxable income is reduced by $1,000, so your income tax is reduced by $150 (15% of $1,000). You then have the $1,000 to apply to your health expenditures. If you are in the 30% tax bracket, you gain $300!
Question> What happens if I don't submit all of my expenses by the end of the year? Answer> You may submit claims for a given year up until March 31 of the following year. Question> Can elderly day care payments qualify for the Dependent Care FSA?
Question> Is this really a good deal?. Answer> Yes, This is a painless way for many people to save lots of money.
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