Generally, contributions you make to your FSA are not subject to federal or social security taxes. In most instances, there are no state taxes taken out either. The amount you may save depends upon:

• The amount you put into your FSA
• The tax percentage you would normally pay on that money (tax bracket)

Let’s say you want $2,000 taken out of your paycheck this year to put into your FSA. The money you direct to your FSA is taken out of your check before taxes are taken out. That reduces your taxable income by $2,000.

In this example, if you normally pay 30% in federal, social security and state taxes on your income, you would enjoy a tax savings of 30% of the $2,000. In other words, you could get a $600 tax savings on the $2,000 you directed to your FSA.

No. You cannot claim an expense reimbursed by your FSA as an itemized deduction on your federal income tax return. You can only deduct IRS-eligible health care expenses your FSA did not reimburse.

Look at your situation to decide whether taking a tax deduction is better for you than using a health care FSA. Keep in mind that only medical and dental expenses that exceed 7.5% of your adjusted gross income can be deducted on your federal income tax return. Many people do not have enough medical expenses to qualify for this deduction.

Certain qualifying life events allow an employee to either increase/decrease their election or begin/cease participation in a plan. Common qualifying life events include marriage, divorce, birth, death, or a change in the cost of dependent care. The adjustment to the election must be consistent with the event.

If you stop working for your employer or you lose your FSA eligibility, your plan participation and your pre-tax contributions will end automatically. Expenses for services you have after your termination date are not eligible for reimbursement.

Please Note: You may be entitled to elect COBRA continuation coverage under the health FSA and receive reimbursement for qualified expenses incurred after your termination, but only if you continue to make the required FSA COBRA premium payment using your money after taxes have been taken out. Please check with your provider for specifics.

Yes. Most of us believe that our medical and other health information is private and should be protected, and we want to know who has this information. The Privacy Rule, a Federal law, gives you rights over your health information and sets rules and limits on who can look at and receive your health information. The Privacy Rule applies to all forms of individuals’ protected health information, whether electronic, written, or oral.

The Security Rule, a Federal law that protects health information in electronic form, requires entities covered by HIPAA to ensure that electronic protected health information is secure.

• Your reimbursement account information, including information about claims submitted for reimbursement.
• Your COBRA coverage and premium payment information.
• Information your doctors, nurses, and other health care providers put in your medical record.
• Conversations your doctor has about your care or treatment with nurses and others.
• Information about you in your providers’ computer systems.
• Billing information about you.
• Most other health information about you held by those who must follow these laws.

• Some FSA providers offer an FSA debit card. With the debit card you do not have to file any claims to your flexible spending account when you’re covered by a medical, dental or pharmacy plan. Money is automatically deducted from your flexible spending account, and you pay nothing out of pocket at the time of service, as long as there is enough money in your flexible spending account to pay for the charge.

  • You may use the card at any pharmacy, doctor’s office or other health care merchant for eligible health care goods and services. If used elsewhere, the card won’t be accepted.
  • When you use the card at the point of sale, you may be asked to choose “Debit” or “Credit.” If given the option, choose “Credit.”
  • The card may be used for eligible health care expenses only. The IRS mandates that retail establishments such as department stores, warehouse clubs, supermarkets and online pharmacies implement a process called an Inventory Information Approval System (IIAS). This process automatically recognizes items eligible under the flexible spending account at the register based on a list established by the IRS.
  • The card may be declined if the items being purchased are not eligible according to the IIAS.
  • Please keep all itemized receipts and statements. You may be required to submit receipts to your provider to document your debit card expenditures.