Health Benefits Unit

Flexible Spending Accounts

Frequently Asked Questions

  1. Why should I use an FSA for reimbursement rather than deducting the expenses on my income tax return?

  2. Does this plan replace my medical plan?

  3. Can the Flexible Spending Account pay my doctor directly?

  4. Am I refunded the amount left in my account at the end of the year?

  5. Where does the forfeited money go?

  6. Are expenses that are reimbursed by my Health Care FSA eligible to be deducted on my tax return as a medical expense?

  7. What happens if I retire or terminate employment with the company mid-year?

  8. How can I check my account balance?

  9. How long is my election in effect?

  10. Is there a deadline for submitting claims?

  11. I would like to have someone come into my home and take care of my children instead of using a day care facility. Would this expense be reimbursable under an FSA?

  12. I have a baby-sitter who takes care of my kids, but does not have a Tax Identification Number (TIN). What should I do since a TIN is required with each reimbursement request?

1. Why should I use an FSA for reimbursement rather than deducting the expenses on my income tax return?

Only medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI) can be deducted on your income tax form. FSAs are federal tax free from the first dollar; you do not have to meet the 7.5% AGI threshold before receiving the deduction. Money set aside through an FSA is also exempt from FICA taxes. This exemption is not available on your federal income tax return.

2. Does this plan replace my medical plan?

No. This plan offers you a means to pay for eligible out-of-pocket health care expenses with pretax money. You should first submit your claims to your health care plan so that they can pay according to the plan limits. Then, the remaining out-of-pocket eligible expenses can be submitted to your FSA plan.

3. Can the Flexible Spending Account pay my doctor directly?

No, payment is made to the participant only.

4. Am I refunded the amount left in my account at the end of the year?

No. The IRS has determined that an element of risk must be involved in any kind of benefit protection that provides substantial tax savings. Therefore, the IRS has imposed the "Use-It-Or-Lose-It" regulation. However, you can avoid any loss of funds by carefully determining how much to set aside and making sure that you file claims properly.

5. Where does the forfeited money go?

The IRS has imposed strict regulations for the use of forfeited money. Generally, the funds are used to defray the employer’s costs for administering the plan.

6. Are expenses that are reimbursed by my Health Care FSA eligible to be deducted on my tax return as a medical expense?

No, because you have already received reimbursement with tax-free dollars. Only expenses not reimbursed through an insurance plan or an FSA may be claimed on your income tax return.

7. What happens if I retire or terminate employment with the company mid-year?

Under IRS regulations, you would be able to submit claims for reimbursement of expenses incurred prior to your termination/retirement date. Expenses incurred after you leave your employer are not eligible for reimbursement.

8. How can I check my account balance?

You may call SHPS AccountLink phone system at 1-800-678-6684 to find out your account balance and when your last claim was paid – or – simply go to www.myspendingaccount.adp.com/ - link opens new window. The account balance is also printed on the Explanation of Benefits (EOB) which is issued each time SHPS processes your claim. In addition, you will receive a statement at the close of the third or fourth quarter of the plan year. Statements show reimbursements paid to date and your account balance.

9. How long is my election in effect?

Your election is in effect until the end of the plan year. Each year you will have the opportunity to re-enroll and select a new annual election amount. Also, you may change your contribution amount if you experience a qualifying event as determined by the IRS.

10. Is there a deadline for submitting claims?

Yes. You will have 90 days after the end of the plan year to submit claims for reimbursement for expenses incurred during the prior plan year. All claims must be submitted by that deadline. Please note that your claims must have been incurred during the plan year.

11. I would like to have someone come into my home and take care of my children instead of using a day care facility. Would this expense be reimbursable under an FSA?

Yes. You can include expenses paid to a baby-sitter if the services are necessary in order for you (or, if you are married, you and your spouse) to work.

12. I have a baby-sitter who takes care of my kids, but does not have a Tax Identification Number (TIN). What should I do since a TIN is required with each reimbursement request?

If your baby-sitter does not have a TIN, you must submit his/her 9-digit Social Security Number with your reimbursement request.