FSAFEDS The Federal Flexible Spending Account Program

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FSAFEDS The Federal Flexible Spending Account
Program
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Program Overview
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What is a Flexible Spending Account?

• Voluntary tax-favored program offered by
  employers
• Employees use pre-tax salary for eligible
  out-of-pocket health and dependent care expenses
• Key Benefit Save Money!
• Discount on eligible expenses equal to tax
  savings
• 20-40 savings

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How does an FSA work?

• You elect to participate and enroll
• Pre-tax dollars are taken out of your paycheck
  each pay period
• These funds are put into your account with SHPS
  (designated third party administrator)
• You incur an eligible expense

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How does it work? (cont.)

• 5. You complete a claim form and submit it to
  SHPS
• 6. SHPS verifies your claim and sends you money
• You save money!

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Annual Tax Savings Example
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Your Annual Tax Savings
1. Find your Federal income tax rate, based on
your expected 2006 income
2. Enter your total Federal tax rate 1
PLUS 1.45 for CSRS OR 7.65 for FERS
_________ This percentage is the discount
you will get using an FSA for eligible
health care and dependent care expenses. 3.
Enter your planned FSA contribution for 2006
_________ 4. Multiply 3 by 2. This is the
amount an FSA will save you in 2006 on
eligible expenses ___________
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Two types of FSAs

• Health Care FSA (HCFSA)
• For eligible medical expenses not paid
• by FEHB or any other insurance
• Dependent Care FSA (DCFSA)
• For eligible dependent care expenses
• (childcare, elder care) so you
• (and spouse) can work, look for work,
• or attend school full-time

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How an FSA works

• Determine your annual contribution
• HCFSA maximum 5,000 per individual
• DCFSA maximum 5,000 per household
• 250 minimum either account
• including any child care subsidy received

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How an FSA works (cont.)

• Enroll in one or both FSAs
• Authorize payroll deduction
• Submit claims to FSAFEDS (SHPS)
• Documentation required Explanation of
• Benefits detailed receipt affidavit
• Reimbursement
• Electronic Funds Transfer

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Eligibility for FSAFEDS

• Must be employed by an Executive Branch agency or
  another agency that has agreed to offer the
  FSAFEDS program
• HCFSA
• Must be FEHB eligible
• Need not be enrolled in FEHB
• DCFSA
• Almost all Federal employees eligible
• Do not need to be FEHB eligible
• Ineligible intermittent employees expected to
  work fewer than 180 days/yr

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2 ½ Month Extension

• You have from January 1 to March 15 of the next
  year to incur eligible HCFSA or DCFSA expenses
• 14 ½ months to spend your annual allotment
• All contributions not spent on eligible expenses
  by March 15 will be forfeited
• You have until May 31 to file claims

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Administrative Fees

• All agencies pay fees for employees
• Employees do not pay fees to participate
• Financed by agencies employment tax savings

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Eligible Expenses
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HCFSA Eligible Expenses

• Health care expenses not paid by FEHB, other
  insurance or any other source.
• Expenses incurred by you and/or your
• dependents are eligible

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Typical HCFSA Expenses

• Over-the-counter medications
• Acupuncture
• Childbirth classes
• Chiropractic care
• Co-payments, co-insurance and deductibles (but
  not insurance premiums)
• Expenses that exceed medical, dental, vision
  plan limits
• Dollar or visit maximums out-of-network
  providers

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Typical HCFSA Expenses

• Dental care
• Including crowns, endodontic services, implants,
  oral surgery, periodontal services, sealants
• Eye exams, glasses, contact lenses
• Including prescription sunglasses
• Hearing aids
• Home medical equipment
• Wheelchairs, oxygen, respirators, etc.
• Infertility treatments

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Typical HCFSA Expenses (cont.)

• Laser eye surgery
• Occupational therapy
• Orthodontia
• Orthotics
• Prescription drugs
• Preventive care
• Smoking cessation programs

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Typical HCFSA Expenses (cont.)

• Specialized equipment or services for disabled
  persons
• Automobile equipment
• Braille books and magazines
• Guide or companion animals
• Home alert systems for visual/hearing impaired
  persons
• Note takers or ASL interpreters
• Tape recorder and typewriter for visually
  impaired

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Typical HCFSA Expenses (cont.)

• Psychotherapy
• Speech Therapy
• Transportation expenses related to medical care
• Mileage and parking
• Whirlpool baths
• Wigs for hair loss from disease
• With Certificate of Medical Necessity

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Ineligible HCFSA Expenses

• Cosmetic services (unless resulting from disease
  or illness)
• Expenses you claim on your tax return
• Expenses reimbursed by other sources (e.g.,
  insurance)
• Fees for exercise or health clubs (unless
  prescribed by a physician for a medical problem)

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Ineligible HCFSA Expenses

• Hair transplants
• Insurance premiums
• Vitamins
• Weight loss programs for general well-being

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DCFSA Eligible Expenses

• Dependent care expenses that let you (and
  spouse)
• Work
• Look for work
• Attend school full-time
• Services cannot be provided by your dependent

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Typical Dependent Care Expenses

• Child care at a daycare center, day camp, nursery
  school or by a private sitter
• Late pick-up fees
• Before and after-school care (but not tuition)
• Care of an incapacitated adult you claim as a
  dependent on your Federal Income Tax return
• A housekeeper who also cares for an eligible
  dependent

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Ineligible DCFSA Expenses

• Education or tuition fees
• Late payment fees
• Overnight camps (in general)
• Agency fees for finding a care provider
• Au Pair placement fees and weekly stipend
• Sports lessons, field trips, clothing
• Transportation to/from the care provider

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Plan Allotments
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Benefit Period

• Employees must enroll each Open Season to
  participate
• Enrollments do not carry-over year to year
• Benefit Period January 1 through March 15 (of
  the next year)
• Salary contribution deducted equally among pay
  dates during the calendar year (January 1
  December 31)
• Can elect accelerated deductions

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Online Calculator

• Interactive calculator available online at
  WWW.FSAFEDS.COM
• Enter salary and tax information
• Enter Health Care FSA and/or Dependent Care FSA
  contribution amount
• Enter estimated expenses
• Calculate potential annual tax savings

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Payroll Deduction Process

• Employee identifies employing agency at
  enrollment
• FSAFEDS submits electronic file to agency payroll
  provider with employee info, allotment amounts
• Payroll provider confirms employee info and
  allotments
• FSAFEDS must resolve discrepancies before making
  reimbursements

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Availability of Funds

• HCFSA total annual election is available when
  FSAFEDS receives 1st allotment
• DCFSA only amount of current account balance is
  available for claim reimbursement

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Use-it-or-Lose-it Rule

• You must forfeit money unspent at the end of the
  Benefit Period (March 15th)
• IRS Rule (Section 125 of IRS Code)
• No exceptions
• You must file claims by May 31th that follows the
  end of the Benefit Period
• Plan carefully when making elections

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Tracking Account Balances

• Secure online account access
• WWW.FSAFEDS.COM
• Call toll-free
• 1-877-FSAFEDS (372-3337)
• TTY line 1-800-952-0450
• FSAFEDS Reimbursement Statement sent when claims
  processed
• Email or mail
• Account statements sent in March, October and
  January

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EnrollmentOpen Season Fall 2006
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Enroll Online

• WWW.FSAFEDS.COM
• Follow the simple enrollment process
• Receive personalized confirmation

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Enroll By Telephone

• FSAFEDS Benefits Counselors
• Toll-free 1-877-FSAFEDS (372-3337)
• TTY line 1-800-952-0450
• Provide required information
• Receive personalized confirmation

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Enrollment Option

• Electronic Funds Transfer (EFT)
• Fast reimbursement    
• Accelerated deductions
• Higher deductions from fewer paychecks
• Full allotment deducted sooner

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Enrollment Options (cont.)

• Paperless Reimbursement
• Available with some (not all) FEHB plans
• Claim filed with FEHB plan
• FEHB plan forwards Explanation Of Benefits
  directly to FSAFEDS
• Often no out-of-pocket payment
• Payment made directly to you from FSAFEDS account
  via Electronic Funds Transfer

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New Employee Enrollment

• New employees have 60 days to enroll
• Must enroll by October 1
• After October 1, must wait for next FSAFEDS Open
  Season

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Enrollment Changes

• May change elections any time during Open Season
• Qualified Life Event (QLE) required after Open
  Season
• Requested change must be consistent with event
  that prompts change, e.g., or
• Increase DCFSA or HCFSA election after birth or
  adoption of child
• Decrease DCFSA election if spouse stays home with
  child

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Qualified Life Event

• QLEs defined by IRS
• Change in marital status
• Change in number of dependents
• Change in dependents eligibility, e.g., or
• Children age 13 and older are not eligible for
  DCFSA coverage
• Change in cost or coverage, e.g., fee increase
• Change in employment or residence status

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Qualified Life Event

• Must notify FSAFEDS of change request from 31
  days before to 60 days after event
• Download QLE form at www.fsafeds.com
• FSAFEDS will verify that event was a QLE and will
  process requested election change
• QLE for birth/adoption of child is retroactive to
  date of event

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Separation

• No further allotments
• DCFSA balance, at separation, is available for
  expenses incurred until end of the Benefit Period
  or until balance is depleted
• No refund available
• HCFSA terminates at separation
• Expenses incurred before separation are eligible
  for reimbursement
• No refund available

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Claims Reimbursement
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Claim Forms

• Available online
• WWW.FSAFEDS.COM
• Or by telephone
• 1-877-FSAFEDS (1-877-372-3337)
• TTY line 1-800-952-0450
• FAX or mail claim to FSAFEDS (SHPS)
• 1-866-643-2245 (toll-free) or
• 1-502-267-2233

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Required Documentation HCFSA

• Explanation of Benefits form (EOB)
• From FEHB Plan or other insurance
• Must indicate type of service, date(s) of
  service, amount owed
• or
• Signed affidavit with detailed receipts
• Must indicate type of service, date(s) of
  service, amount paid
• , with Paperless Reimbursement

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Required Documentation DCFSA

• Attach copy of bill or signed receipt to claim
  form OR
• Provider signs affidavit on claim form
• Providers tax ID or SSN required on all claims

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Reimbursement Reminders

• Expenses are incurred on date of service, not
  when expense is paid (Orthodontia is an
  exception)
• Expense must be incurred during the Benefit
  Period
• All claims must be postmarked by May 31,
  following end of Benefit Period
• Unclaimed funds are then forfeited

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Contact Us

• WWW.FSAFEDS.COM
• FSAFEDS-HR_at_SHPS.COM
• TTY line 1-800-952-0450 Benefits
  Counselors are available Monday through Friday,
  900 a.m. to 900 p.m., Eastern Time.
• 1-877-FSAFEDS (372-3337)