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Flexible Spending Accounts- What You Should Know!


A few months ago you were able to learn about Health Savings Accounts and their expected changes from the Healthcare Corner E-newsletter. Continuing our educational journey this month, Healthcare Corner wants to answer your questions about Flexible Spending Accounts (FSA). We'll also keep you up-to-date on the changes coming due to the national healthcare reform bill.


An FSA is an IRS regulated account offered through your employer that allows you to set aside a portion of your earnings to pay for qualifying unreimbursed expenses. The account automatically deducts money from your paycheck before payroll taxes, resulting in tax savings and an increase in your take-home pay.


FSAs are not the same as HSAs and in most cases, you cannot have both types of accounts. In an HSA your funds roll over and accumulate year to year if not spent. This does not happen for an FSA account. You can use an FSA account even if you don't have health insurance. With an HSA, you have to have a high deductible health plan in order to qualify. Also, only unreimbursed medical expenses are covered under an HSA. Flexible Spending Accounts covers both unreimbursed medical and child-care expenses.


As mentioned, with your FSA you have two reimbursement plan options, healthcare and dependent care. Healthcare reimbursement pays for medical expenses such as co-pays, deductibles, vision, dental and over the counter medicine. Dependent care reimbursement pays for expenses including daycare, preschool, day camps, babysitting and after-school programs.


With an FSA, you may enroll regardless of your health insurance benefit selection, the plan is available as long as you are employed. The funds however must be used within your plan year or grace period or the funds will be forfeited.


Under national healthcare reform, a cap will be placed on the amount that can be put into FSAs at $2,500 per employee, down from $5000. This provision will apply to all tax years beginning after December 31, 2010.


You can only enroll in an FSA during open enrollment or when you become newly eligible so your time to act is quickly approaching! As always, we will continue to be your partner as you work to find the employee benefit solutions that best suit your needs.  Please do not hesitate to contact Christian Solecki, Benefits Manager, at 716.632.6905 or with any questions or concerns you may have.



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