by admin | Aug 17, 2022 | Blog
A Dependent Care FSA, or DCA, is a flexible spending account that allows employees to contribute to a portion of their paycheck, pre-tax, to pay for qualified dependent care expenses. Here is a list of five facts regarding this account.
Fact #1: Any participant of this account can enjoy a 30% average tax savings on the total amount they contribute to a DCA.
Fact #2: Contributing money to this account starts by first making an annual election during open enrollment. From there, your employer will deduct the election amount from your paycheck before taxes are assessed in equal amounts throughout the year.
Fact #3: You can contribute up to the IRS limit of $5,000 annually on income tax returns if filing single or married jointly. If married and contributing to an account separately, you can contribute up to $2,500 each, or $5,000 total.
Fact #4: Eligible expenses for a DCA must be for the purpose of allowing you to work or look for work. Services may be provided at a child or adult care center, nursery, preschool, after-school, summer day camp, or a nanny in your home.
Fact #5: There are two methods to use funds in a DCA. One option is paying directly from your account through a benefits debit card (only if your care provider accepts credit cards). The second option is paying out-of-pocket and then file a reimbursement claim with your expense documentation.
by admin | Jul 28, 2022 | Blog
A Commuter Benefits FSA is a reimbursement plan governed by the IRS that grants employees to contribute a set amount of gross income to a designated account(s) before taxes. The two types of Commuter Benefit accounts are transportation and parking. Here are questions to consider regarding this plan.
What expenses are eligible for reimbursement from a Commuter Benefit FSA?
Transportation Accounts: Any out-of-pocket expenses for passes, farecards or vanpooling for transportation to and from a plan holder’s residence.
Parking accounts: Any out-of-pocket expenses for parking at or close to an employer’s business. In addition, parking expenses at or near a location from which a plan holder commutes by way of mass transit or commuter vehicle.
What is the maximum amount a participant can contribute to a Commuter Benefits FSA?
Both the Transportation and Parking accounts have a maximum monthly contribution of $280 for 2022. This amount varies every year.
by admin | Jul 27, 2022 | Blog
Question: Our company currently offers a general-purpose health FSA. If we switched to an HDHP/HSA, could our employees receive tax-free reimbursements for the same types of expenses from their HSAs?
Answer: Yes, and they might acquire a few additional options. Like health FSAs, HSAs can provide tax-free reimbursement of out-of-pocket expenses for medical care. But HSAs also can reimburse certain expenses that health FSAs cannot. Those differences are highlighted below.
- Nonmedical Expenses: Unlike health FSAs, HSAs can make distributions at any time and for any purpose, although only distributions for qualified medical expenses are tax-free. Some taxable distributions may also be subject to a 20% excise tax.
- Insurance Premiums: While HSAs generally cannot reimburse health insurance premiums or coverage contributions on a tax-free basis, there are a few exceptions:
- Qualified long-term care insurance
- Any federally required continuation coverage (e.g., under COBRA or USERRA)
- Health plan coverage while the HSA account holder is receiving unemployment compensation under state or federal law
- For HSA holders who are age 65 or older, any health insurance other than a Medicare supplemental policy
- Qualified Long-Term Care: Unlike health FSAs, HSAs can reimburse qualified long-term care services on a tax-free basis.
In addition, HSAs cannot limit the types of expenses that are reimbursable on either a taxable or tax-free basis because they are individual trusts to which account holders must have unrestricted access, subject only to reasonable restrictions on the frequency or minimum amounts of distributions. HSAs are also different in terms of whose expenses they can reimburse tax-free. Health FSAs can provide tax-free reimbursements for the expenses of employees’ children who are under age 27 at the end of the taxable year, regardless of their status as tax dependents. However, HSAs can only provide tax-free payment or reimbursement of the expenses of an HSA account holder’s child if the child qualifies as a dependent. Keep in mind that other requirements (e.g., regarding substantiation of expenses) will also apply and may vary from arrangement to arrangement.
Source: Thomson Reuters
by admin | Jul 25, 2022 | Blog
A limited-purpose FSA (LPFSA) is a Health Savings Account (HSA) eligible FSA plan that allows you to set aside pre-tax dollars for dental, vision, and orthodontia expenses for you and your dependents, even if they are not covered under your primary health plan. The Limited Purpose FSA covers these eligible expenses, tax-free while your HSA covers eligible medical expenses. It’s a great way to save on HSA dollars – especially if you choose to use your account to invest.
There is an abundance of benefits by enrolling in a LPFSA, notably:
- At the outset of the plan year, your LPFSA is pre-funded, and your full contribution amount is immediately available for use.
- In addition to your HSA contributions, you are able to set aside additional LPFSA tax-free contributions, up to $2,850 in 2022.
- Preserve HSA funds for other purposes, like investing or saving for retirement.
- Money contributed to a limited-purpose FSA is tax-free when it’s spent on eligible dental, vision, and orthodontia expenses, including dental exams, x-rays, vison exams, and much more.
by admin | Jul 18, 2022 | Blog
In the event of employment termination for an account holder, there are several notable procedures and regulations that occur:
- Any participation in a Flexible Spending Account (FSA) – Health Care FSA, Limited Purpose FSA, Dependent Care FSA, Adoption Assistance, or Commuter Account – will end along with the ability to incur additional expenses for reimbursement.
- All future salary reductions will end.
- If you have a NueSynergy FSA benefit card, the card will be deactivated on date of termination.
- You will have 30 days from your date of termination to submit manual claims to NueSynergy by mail, online, fax, or mobile application.
- Manual claims submitted during a 30-day window must have dates of service prior to date of termination.
