Flexible spending accounts!  They’re like a pay raise!

Using a flexible spending account (FSA), you can pay for your health care and day care expenses and save money at the same time! 

By enrolling in the FSA program, you set aside pre-tax dollars to pay for health care expenses that are not covered by your other benefit plans.  And, you can get the same pre-tax savings by opening an FSA to pay for childcare expenses.    

That means more money for you and your family!  

Here’s how it works 

Let’s say you have an annual base salary of $34,000, and you are in the 32 percent income tax bracket.  You estimate that you will have $2,400 in out-of-pocket health care expenses next year, so you decide to enroll in the health care FSA and contribute $2,400.  In this example, you’re paid on a monthly basis, so your monthly contribution to the FSA will be $200 per month. That’s the $2,400 divided over 12 monthly paychecks.  Let’s see how this saves you money.

Without the FSA, you would pay for those health care expenses with after-tax dollars, and you would have $20,720 remaining after paying such costs.  With the FSA, you would have the $2,400 withheld from your pay pre-tax, and you would have $21,488 remaining. In this example, your spendable income has increased by $768 by paying health care expenses with before-tax contributions. The money that you set aside in the FSA is available to you when you have out-of-pocket health care expenses during the year.  When you are reimbursed for those expenses, you are paid with tax-free dollars.

You can put up to $6,000 per year in your health care FSA and up to $5,000 in a dependent care FSA, but plan carefully.  If you don’t use all the money you set aside in your FSA, the law says you lose it.  You can use money in your FSA to reimburse expenses throughout the calendar year and through March 15 of the following calendar year.  If you estimate carefully, your chances of forfeiting money should be slim.   

Signing up to participate in an FSA is easy; simply fill in the amount you want to contribute to your health care and/or dependent care FSA on your benefits open enrollment form. The amount you indicate will be taken from your paycheck in equal installments over the course of the year.  These deductions will be then be used to reimburse your eligible health care or day care expenses. 

No claim forms to fill out for health care FSA

Purdue’s health care FSA program offers the advantage of automatic reimbursement, a feature that can save you the time and effort of filing FSA claims.  With this feature, your out-of-pocket expenses for deductible, coinsurance, and copayments are automatically filed with your health care FSA after your medical plan claim is processed. You may elect to have your FSA reimbursement directly deposited in your bank account. Complete the FSA Direct Deposit Authorization form. You may opt out of this service if you want by completing the Auto Reimbursement Waiver/Election Form.

For health care expenses that are not processed through your medical plan and for your day care expenses, you may mail or fax your claim form and documentation. See claim forms on the Human Resources forms page.

Quick processing

Fiserv Health, Purdue’s FSA administrator, processes FSA claims every business day and takes pride in turning around 99 percent of claims within 10 business days.  And payments are issued on the day your claim is processed. 

What’s eligible for reimbursement?

Your health care FSA can be used for expenses such as these: 

• Deductibles, coinsurance, and copayments
• Eye care, including laser eye surgery, exams, glasses, and contacts 
• Dental care, including braces 
• Routine physicals, X-rays, and lab fees 
• Over-the-counter medications that alleviate or treat injuries or sickness

Check Fiserv’s Web site for a comprehensive list of what is eligible and ineligible on your FSA. 

Use your day care FSA to pay for dependent day care needed while you (and your spouse, if you’re married) are attending school on a full-time basis or working.  Allowable expenses include those for care provided in your home, a sitter’s home, or a day care facility.

Tell me more!

For more details about the FSA program, visit Purdue’s FSA info page.