Save money by paying for health and dependent care expenses through FSA!
A flexible Spending Account (FSA) allows you to set aside money from your paycheck (no tax withholding) to pay for medical or dependent care expenses. There are two types of Flexible Spending accounts offered. A Health Flexible Spending Account (HFSA) is for healthcare costs such as co-pays, prescriptions, and dental and vision services for you, your spouse, and your dependent. A Dependent Care Flexible Spending Account (DCFSA) is for care expenses of a child under 13 and/or an adult incapable of self-care, that enables you to work.
The advantage is that you're saving pre-tax dollars, so you end up paying fewer taxes on your salary and have more to spend. Most employees save at least 25% on each dollar set aside in their FSA. Additionally, you can access your entire year's worth of health care contributions at the start of the plan year.
Here's how the program works
- You decide how much to set aside for health and/or dependent care expenses ("annual election" may not exceed maximum limits). This amount is divided by the number of payroll checks you expect to receive the next calendar year (maximum of 24).
- Through payroll deduction, this amount is taken from your paychecks (before taxes-see example) and deposited to your FSA account(s).
- You incur an expense and choose a claim option to receive reimbursement. ASI processes your “in good order” claim by the next business day and sends you a reimbursement by direct deposit or check.