Health Care (FSA)
Allows you to set aside up to $3,200 a year through payroll deductions for payment of eligible health care expenses for you and your dependents.
Flexible spending accounts, or FSAs, provide you with an important tax advantage that can help you pay health care and dependent care expenses on a pre-tax basis. Essentially, the Internal Revenue Service (IRS) set up FSAs as a means to provide a tax break to employees.
You can use your Health Care FSA on medical, dental and vision expenses that are not reimbursed by insurance. You can also use it for many over-the-counter products. For a full list of eligible expenses, go to https://www.basiconline.com/blog/fsa-eligible-expenses/
As an employee, you agree to set aside a portion of your pre-tax salary in an account, and that money is deducted from your paycheck over the course of the year. The amount you contribute to the FSA is not subject to social security (FICA), federal, state or local income taxes — effectively adjusting your taxable salary.
The taxes you pay each paycheck and collectively each plan year can be reduced significantly, depending on your tax bracket. As a result of the personal tax savings you incur, your spendable income will increase.
Reminder: You may rollover up to $640 into the next plan year, but any amount over $640 in your account at the end of the plan year is forfeited.
Dependent Care FSA
This account allows you to fund the costs of dependent care on a pre-tax basis. The care must be provided by a dependent care center or by an individual who can provide a name, address, and taxpayer identification number. You may contribute up to $240 minimum and a maximum of $5,000 each year, per household. Although you may not take the childcare tax credit if you choose this option, you may save more depending on your income level. The plan year runs July 1 through June 30. Important Note: A qualified adult dependent must reside with the employee and use a valid adult day care center/provider.
Video: Flexible Spending Account
