The Health Care Flexible Spending Account is a tax-free account that allows you to pay for essential health care expenses such as deductiblesDeductibleAn amount that you are required to pay before the plan will begin to reimburse for covered services., copaysCopayment (copay)A fixed-dollar amount that you must pay out of your pocket at the time of service to a provider or a facility for a specific health covered service.  Copays do not apply to the deductible requirement. For example, an office visit may have a copay of $30 under the Exclusive Plan and $40 under the Extended.  You must pay the amount at the time of service., coinsuranceCoinsuranceThe portion of expenses that you have to pay for certain covered services, calculated as a percentage. For example, if the coinsurance rate is 20%, then you are responsible for paying 20% of the bill, and the insurance company will pay 80%.  and prescription drugs that are not fully covered by your medical, dental and vision insurance plans.  See eligible expensesEligible ExpensePurchases or services received that are allowed by the benefit provider and complies with IRS regulations. from our plan administrator, ASIFlex.

Limitations: You cannot participate in an HCFSA and a Health Savings Account (HSA)HSA (Health Savings Account)A tax-savings account that must be paired with a High-Deductible Health Plan, which can be used to pay for qualified health care expenses now or in the future. An HSA is a savings account that you own. The funds in an HSA carry forward year after year, even if you change employers or retire.  at the same time. 

Last plan year (July 1, 2019-June 30, 2020)

IRS contribution limit: $2,700 per employee for the 2019-20 plan year.

Deadlines: 

Current plan year (July 1, 2020 – June 30, 2021)

IRS contribution limit: $2,750 per employee for the 2020-21 plan year.

Deadlines: 

  • You must incur qualifying expenses between July 1, 2020 and Sept. 15, 2021 for reimbursement by Nov. 15, 2021. 
  • If you do not use all of your funds within the FSA, the remaining amount will be forfeited.

Determine your contributions

FSAFSA (Flexible Spending Account)A tax-savings account set up by you to pay for certain qualifying expenses on a pre-tax basis, meaning before they are made subject to payroll taxes. contributions start on July 1, the first day of the plan year. 

Contributions end on June 30, but you'll have until Sept. 15 to spend your money.

  How much should you save?

Flexible Spending Accounts run on the CU plan year, beginning July 1 and ending June 30.

HCFSA Basics

HCFSA contributions

  • Current plan year: Your pre-tax contributions can be a minimum of $10 per month up to an annual total maximum of $2,750 for the 2020-2021 plan year (July 1 to June 30) per employee. The money is deducted from your paycheck pre-tax.
  • The amount you elect will be divided by the number of remaining pay periods in the plan year.  Your final contribution will be June 30. 
  • Your election is fixed for the Plan Year however, changes are permitted if you experience a Qualifying Life Event

Spending your money

Use it or lose itUse It or Lose ItThe IRS regulations in regards to the money you elect to contribute to flexible spending accounts that must be spent and claimed within the designated period of time or the monies will be forfeited.   accounts

Failure to incur the expense and claim the reimbursement by the deadline will result in the forfeiting of your funds.

  • Plan year 2019-2020: You must incur expenses from July 1, 2019 to Sept. 15, 2020 and claim the money by Nov. 15, 2020 
  • Plan year 2020-2021: You must incur expenses from July 1, 2020 to Sept. 15, 2021 and claim the money by Nov. 15, 2021

Effect on Social Security

Cafeteria planCafeteria PlanA plan that meets the requirements of IRS Code Section 125 and offers participating employees certain non-taxable benefits, such as the Premium Only Plan and flexible spending accounts dollars are deducted from your pay pretax, meaning before federal, state, Social Security and Medicare taxes are paid. Participating in cafeteria plansCafeteria PlanA plan that meets the requirements of IRS Code Section 125 and offers participating employees certain non-taxable benefits, such as the Premium Only Plan and flexible spending accounts reduces the salary on which annual contributions to Social Security are calculated, which may result in a reduction of the Social Security benefits received at retirement.

Effect on PERA

Cafeteria planCafeteria PlanA plan that meets the requirements of IRS Code Section 125 and offers participating employees certain non-taxable benefits, such as the Premium Only Plan and flexible spending accounts dollars are deducted from your pay pretax, meaning before federal, state, and Medicare taxes are paid.  Your PERA retirement annuity or disability retirement is based on your PERA Highest Average Salary (HAS) calculation. Since cafeteria plans reduce the salary on which PERA calculates benefits, your PERA retirement benefits may be reduced.

Review the FSA plan document.