You’ve got questions, we’ve got answers.

Unsure of the difference between a grace period and the carryover? Wondering what happens to your HSA if you switch employers or retire? Not sure which plan documents you need to ensure your group plan is compliant?

NueSynergy wants to make sure you understand the ins and outs of your benefit account, so we have put together a comprehensive list of the most common questions we receive about employee benefits.

Did we not answer your question? Contact our team to get the answers you need and help us improve our list.


• Dependent under the age of 13; or

• Dependent or spouse of employee who is mentally or physically disabled and whom the employee claims as a dependent on his or her Federal Income Tax return.

Any new plan year funds will pay first and the carryover funds will pay second. Employees get the best use of their funds by having the new plan year pay first, and the carryover funds pay second.

All “eligible employees” who received compensation during the previous year are included in nondiscrimination testing. Generally only union employees, non-resident aliens, leased employees and independent contractors can be excluded from nondiscrimination testing because they are not considered “eligible employees.”



They will be available on the first day of the new plan year unless you enroll in a Health Savings Account. Which will require your funds to carry-over into a limited purpose FSA. If this occurs, your funds will be available at the end of the current plan years run-out period.

Your elections into the the Dependent Care FSA become available as they are contributed. As you incur daycare expenses, you will be reimbursed up to the amount that has been contributed thus far in the year.

For example: You elect $5,000 and have $208 taken out of each paycheck throughout the year. After two (2) pay periods you submit a daycare claim for $500. Your current dependent care balance is $416. You will be reimbursed $416 immediatley and following your next payroll contribution, you will be reimbursed the remaining $84.

The availability of carryover funds differs when carrying over between a healthcare to healthcare FSA versus from the healthcare to limited purpose FSA.

Healthcare to Healthcare: The carryover amount is available to the participant on the first day of the new plan year. This means that the carryover amount is simultaneously available to pay previous plan-year expenses and current plan-year expenses during the previous plan year run-out period.

Healthcare to Limited Purpose: The carryover amount is available to the participant on the first day following the end of the run-out period. This means any current-year dental or vision claims incurred during the run-out period that were not reimbursed by a current-year limited purpose election would be reimbursed once the carryover funds are available.

The grace period is an additional 2.5 months following the plan-year close to incur expenses against the previous plan year's election. This gives employees some additional time to use remaining funds. If the carryover option is elected, it will replace the grace period option.

Both HSAs and FSAs allow you to pay for qualified medical expenses with pre-tax dollars. One key difference, however, is that HSA balances can roll over from year to year, while FSA money left unspent at the end of the year or after a designated grace period is forfeited. You may choose to use a Limited Purpose FSA to pay for eligible heath care expenses and save your HSA dollars for future health care needs. You may use Limited Purpose FSA dollars to reimburse yourself for expenses not covered by your high-deductible health plan, such as:

1. Vision expenses, including: Glasses, frames, contacts, prescription sunglasses, goggles, vision co-payments, optometrists or ophthalmologist fees, and corrective eye surgery

2. Dental expenses, including: Dental care, deductibles and co-payments, braces, x-rays, fillings, and dentures

A limited purpose FSA can only be used for vision and dental expenses. It is intended to work in conjunction with an HSA. A healthcare FSA covers all eligible medical expenses.

On October 31, 2013, the U.S. Department of the Treasury changed the “Use It or Lose It” rule, providing employers the ability to offer a Carryover option which allows for up to $500 of FSA balances remaining at the plan-year end to carry over for use during the next plan year. The Carryover option is available with healthcare and limited purpose FSAs.

Each year, the IRS requires companies with pre-tax reimbursement accounts to complete nondiscrimination testing. Nondiscrimination testing ensures that the business owners and Highly Compensated Employee(s) (HCE) do not receive a disproportionate benefit from a pre-tax plan compared to other employees.

You may set aside pre-tax dollars to cover eligible medical expenses that are not covered by any other type of insurance. The account helps you budget for planned expenses such as deductibles, co-payments and prescriptions. You may refer to the FSA eligible expenses tool on this site for a list of eligible and ineligible expenses.

You can use pre-tax dollars to cover eligible work-related dependent care expenses for qualified dependents, or if you are married, while you and your spouse work or your spouse attends school full-time.

When you participate in a payroll deduction program through your employer, deductions can be taken from your payroll before calculating your taxable federal income, FICA (Social Security and Medicare) tax and for most states, taxable state income. By taking deductions pre-tax, you reduce the dollars on which you are taxed and, as a result, reduce your total tax bill.

There are two main types of supporting documentation for health FSA claims:
i. Explanation of Benefits (EOB):
Each time you submit claims to your health insurance carrier, you will receive this statement detailing what the health plan will pay and what you must pay. For expenses that are partially covered under another insurance plan, you must attach a copy of both of the EOBs.

ii. Itemized Bills:
For expenses that are not submitted to another insurance plan, you must attach a copy of an itemized bill containing the following information:
- Name of patient
- Name and address of provider
- Description of service
- Date of service
- Amount of service

Request for Reimbursement Form: Complete the Dependent Care section of the Request for Reimbursement Form and have your daycare provider sign and date.

  • Receipt: The receipt must include the following information:
  • Name, address and Tax Identification # of provider
  • From/through dates of service
  • Amount of charge

No. However, you can continue to submit claims incurred prior to your termination date before the end of the run-out period (defined in your Summary Plan Description).

For example: Your plan has a 90-day run-out period following termination. Your termination date is September 13th. Your physician sees you on September 12th, but you do not receive the Explanation of Benefits from your insurance carrier until October 31st. You can still submit this expense as it was incurred prior to your termination date, and prior to the end of the 90-day run-out period following your date of termination. Any expense incurred after September 13 is not eligible.

• Change in legal marital status (marriage, death of spouse, divorce, legal separation, annulment)
• Change in number of tax dependents (birth, death of dependent, adoption or placement for adoption)
• Change in dependent’s eligibility
• Change in employment status of employee, spouse or dependents
• Other changes that may permit an election change under the Dependent Care FSA are:

     ○ Change of dependent care provider
     ○ Change of rate charged by unrelated dependent care provider
     ○ Child attaining age 13

Election changes must be consistent with the event. If you experience a Change in Status, please review your Summary Plan Description, as it will provide you with important information on the deadline for reporting this event.

No. The carryover funds can be used anytime for expenses incurred in the new plan year in addition to any new elections. If any funds remain at the end of the current plan year, up to $500 is carried over into each new plan year as long as the participant remains an active employee.

Employers can choose to allow a carryover of any amount up to $500 per participant per plan year. NueSynergy encourages employers to allow the full carryover amount.

No. In order to be considered an eligible expense, the expense must be incurred prior to your termination date. However, you may be able to continue your Health FSA coverage under COBRA.

No. Any funds remaining in an individual’s current plan year FSA will be automatically rolled into the new plan year even if the employee didn’t elect to participate in a new plan year FSA. The participant now has the chance to spend up to $500 of his/her carryover money on out-of-pocket healthcare expenses in the following year.

If year-to-date contributions exceed the amount of reimbursements and there is a remaining balance, the employee has a COBRA election available for the remainder of the plan year. If they do not elect COBRA, then expenses can only be submitted up to the end of their termination run-out period after which and funds remaining would be forfeited.

It would not. Carryover allows amounts in a healthcare FSA – limited purpose or otherwise – to carry over into the next plan year. The Carryover option will follow the participant’s choice. If a participant elects a limited purpose FSA for the current plan year, and has a carryover, the carryover will follow them into the limited purpose FSA for the new plan year. Similarly, if the participant elects a healthcare FSA in the current plan year and has a carryover, the carryover will follow them into a healthcare FSA for the new plan year.

However, if a participant elects to participate in an HSA for the new plan year, and currently has a healthcare FSA, the participant should either spend all amounts in the healthcare FSA before the plan year ends, or enroll in a limited purpose FSA for the new plan year so they can contribute to the new HSA on the first day of the following plan year.

You will receive an email indicating the reason for the denial along with instructions for submitting the requested documentation.

Once you make your annual election, your employer will deduct this amount from your paycheck in equal amounts throughout the year, before taxes are taken out.

To enroll in the Health and/or Dependent Care FSA, you simply need to fill out the Enrollment Form or enroll online, if available, before the beginning of each Plan Year.

Generally, no; however, if the camp is day camp and your dependent attends to allow you and your spouse (if married), to work, look for work or attend school full-time, then yes this would be an eligible expense. Overnight camps are specifically excluded.

No. Participants can still choose to contribute the full FSA annual maximum allowed for that plan year, even if they carry over $500 from the previous plan year.

No. However, you are required to submit his/her Tax Identification Number or Social Security Number when filing your Federal Income Tax return.

No. Each year you will have to re-enroll before the beginning of the Plan Year. At that time, you will have the opportunity to evaluate the need to participate in the Plan as well as budget for all health care and/or dependent care expenses. You may decide to keep the same election, change your election or in some cases waive participation.

Once you make an election, you may not change your election unless you experience an IRS “Change in Status” or “qualified life event.” If you do experience a qualified life event or change in status (such as marriage, adoption, divorce, etc.) your election change must be consistent with the Change in Status event. For example, if you adopt a child then you may increase your Dependent Care FSA election due to the newly eligible dependent.

Yes, an adult may qualify as a dependent provided that the employee is providing more than half of that individuals support for the year, and the dependent lives with the employee and is physically and/or mentally incapable of caring for him/herself.

Yes, you may be reimbursed for expenses incurred for you, your spouse and any IRS dependents, regardless of where you are insured. For example, you might have coverage through your spouse’s employer’s plan (rather than your employer's) and you may still submit your family out-of-pocket expenses to be reimbursed under the Health FSA.

No. You can be reimbursed for expenses provided by an individual providing care for your dependent in your home as long as the expenses are incurred for you and your spouse (if married), to work, look for work or attend school full-time.