The City of Salem will continue to partner with FBA to administer the flexible spending accounts.
What is a Flexible Spending Account (FSA)?
Flexible Spending Accounts allow employees to pay for IRS-approved expenses with pre-tax dollars. Eligible Expenses include all expenses outlined in the IRS Publication 503. You can obtain a copy of this publication from the Internet at https://www.irs.gov/pub/irs-pdf/p503.pdf or by calling 1-800-TAX-FORM. There are three FSA options: Healthcare FSA (for KeyCare 30 Plans), Limited Benefit FSA (for Lumenos HSA enrollees), this plan covers dental and vision out-of-pocket expenses), and Dependent Care FSA. Your health care and limited benefit FSAs are pre-funded accounts. This means the amount you elect for the plan year will be in your account on the first day of the plan year and available for reimbursement of eligible health care expenses. You will pay each pay period to cover those funds. The dependent care account, on the other hand, is not pre-funded. The amount you contribute per pay period is the amount that is in the account and available for reimbursement.
Unlike an HSA, an FSA Account is a “Use it, or Lose it” account. Only put money into your FSA for expenses that you know you will incur during the year because money not used during the calendar year or the grace period that follows will be forfeited. There is a 2 ½ month grace period for incurring expenses so if you have money left over at the end of the calendar year, you can use expenses incurred up to March 15, 2023 against your 2022 balance. Please note that the grace period is not available on a dependent care FSA.
Are you eligible to open a Flexible Spending Accounts (FSA)?
There are three FSA options. If you are enrolled in the KeyCare plans, you may enroll in the Health Care FSA and file for reimbursement of any IRS-approved health expenses. If you are enrolled in the Lumenos HDHP plan, you are NOT eligible for the healthcare FSA. However, if you are expecting to have out of pocket expenses for vision or dental, you can enroll in the limited benefit FSA.
If you pay for dependent care expenses for children up to age 13, a disabled dependent of any age, or a disabled spouse, you may enroll in the dependent care FSA and reimburse yourself for out-of-pocket dependent care expenses with pre-tax dollars. A debit card is provided if you enroll in the health care or limited benefit FSA. This card is a convenient way to pay for your eligible out-of-pocket expenses at the time of service. You must re-enroll each year if you would like to participate in the FSA.
2022 FSA Contributions
The IRS has not yet announced the 2022 maximum FSA contributions. The 2021 FSA contribution limits are included below:
2021 TAX YEAR ANNUAL LIMITS:
• Health Care FSA - $2,750
• Dependent Care FSA - $5,000 ($2,500 if married filing separately)
How do I get reimbursed for my eligible expenses?
The easiest way to use your FSA dollars is by using your FSA Debit Card at the time you incur an eligible expense. Make sure to keep receipts! Your administrator may request a receipt as proof that the expense was incurred and, if you are audited by the IRS, you may need receipts as well. If you do not use your debit card, you can file for reimbursement directly with FBA. All requests for reimbursement must be submitted to FBA no later than March 30, 2022 in order to avoid any forfeiture of funds remaining in the account.