A Health Flexible Spending Account (HFSA) allows you to set aside money from your paycheck (no tax withholding) to pay for medical expenses. An HFSA is for healthcare costs such as co-pays, prescriptions, and dental and vision services for you, your spouse, and your dependent.
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 HFSA. Additionally, you can access your entire year's worth of health care contributions at the start of the plan year.
Qualifying health care expenses
Eligible expenses are those that are incurred by the employee, the employee's spouse, or the employee's qualifying child or qualifying relative during the plan year for medical care (as defined in Section 213(d) of the Internal Revenue Code), excluding all insurance premiums and long-term care expenses. Only the portion of the expenses you owe after insurance payments can be claimed.
For a Complete list of Eligible Expenses . See maximum annual health care expense claim limits.
Qualifying health care expenses include amounts incurred for the diagnosis, cure, mitigation, treatment, or prevention of disease, and for treatments affecting any part or function of the body. The expenses must be primarily to alleviate or prevent a physical or mental defect or illness.
Expenses qualify for the medical FSA based on when they are incurred, not when paid. Estimate your tax savings for medical expenses
IRS Rules for OTC Medications
FSA reimburses expenses for over-the-counter (OTC)drugs, medicines, biologicals, equipment, supplies and diagnostic devices. See complete list of eligible items.
For more information, see the OTC claim instructions
IRS Rules for Coverage of Your Child's Medical Expenses
You may claim eligible medical expenses for your child through the end of the calendar year in which they reach 26. Your child may be a son, daughter, adopted child, stepchild, or eligible foster child. Children no longer have to be tax dependents in order for you to be reimbursed for their medical expenses.
Orthodontia reimbursements
A participant who pays in a lump sum may claim the amount at once. Previously, participants were required to claim monthly payments. Claims may be made for a lump sum of the entire amount of the participant's liability (up to the annual limit). To be reimbursed for orthodontia, the following criteria must be met:
- The braces must have been placed (or the initial work provided) and must still be on the patient.
- You must submit proof of payment with your reimbursement request. The proof of payment can be a paid receipt from your provider, a credit card receipt or your credit card statement.
Call ASI at 800-659-3035 if you have questions about making a claim for orthodontia.
See the FSA Summary Plan Description and FSA Plan Document for more details.