Flexible Spending by Cafeteria Plan Advisors
A flexible spending arrangement (FSA) is a form of cafeteria plan benefit, funded by salary reduction, that reimburses employees for expenses incurred for certain qualified benefits. An FSA may be offered for dependent care assistance and medical care reimbursements.
Flexible Spending Rates
HEALTH CARE | Maximum Election: $2,700
Eligible expenses include medical and prescription co-pays, deductible expenses, non-cosmetic medical and dental services, orthodontics, prescription eyeglasses and contact lenses, laser eye surgery, alternative health therapies (e.9. acupuncture, chiropractic), mental health services, and MORE!
DEPENDENT CARE | Maximum Election: $5,000 per family
For children under age 13 and dependents with special needs. Eligible expenses include daycare, preschool, before/ after-school care, day camp during school breaks, and elder daycare.
Frequently Asked Questions
How much can I allocate?
The IRS limits dependent care contributions to $5000 per tax year (joint return). In addition, the employer sets the medical reimbursement plan limit up to the IRS maximum of $2750.
Can my medical and dependent care expenses be combined?
No. The IRS requires separate accounts to be funded for each.
How do I know if an expense is eligible?
Eligible expenses are listed in the IRS Publication 502, or a partial list may be viewed on the Cafeteria Plan website.
How do I keep track of my balance?
You can set up online access by logging on to www.cpa125.com.
How long does the plan last?
The plan year runs twelve months. Therefore, the employee has to enroll in each year's plan.
What if I want to change during the year or terminate my employment?
This amount may be increased or decreased annually only during open enrollment. The IRS allows some changes to be made in the event of a ‘change in status’ qualifying event, such as birth, death, marriage, divorce, or a change to you or your spouse’s employment. If you terminate, your participation in the plan ceases on your termination date.
Will I get my money back if it is not used?
The amount allowed to roll over is $610.00. So what does that mean for all of us? If a 2022 healthcare balance rolls, it will roll into 2023 in the first week of April. This is because the rollover takes place after the 90-day runout. The 90 90-day runout is when the employees submit for services incurred in 2022.
How will I get reimbursed for expenses?
If your plan offers a prepaid debit card, you will receive two cards in the mail upon enrollment. Once you activate the card, present the card when paying for the services performed or expenses incurred. If you cannot use the prepaid debit card or fail to use the card, submit a manual claim form with itemized receipts after the service/expense is incurred. You can submit claims as frequently as you like, but no later than after the grace period deadline after your plan year ends (typically 90 days). Dependent care accounts must have funds available before payment can be made.
Keep in mind
- The Flexible spending account calendar runs from January-December. The annual Open Enrollment occurs during the month of December of each year. New hires: please ensure to estimate the amount needed from the date of hire until the end of December.