Flexible Spending Accounts
Kellogg Community College offers two Flexible Spending Account (FSA) programs: A Medical
Expense Reimbursement Plan FSA and a Dependent Care Assistance Plan FSA. An FSA is a
tax-effective, money-saving option that will help you pay for qualified healthcare expenses that
are not covered by your medical plan and for dependent care services necessary to enable you
to work.
Eligible medical expenses
Use your pre-tax dollars to pay for eligible medical care expenses not reimbursed by a medical
plan. All IRS code 213(d) expenses are eligible, including deductible, coinsurance, copays and
expenses above usual and customary limits, as well as out of pocket expenses on prescription
drugs, dental, vision, hearing and orthodontic care. Certain over-the-counter medications qualify
too. Eligible expenses are defined in IRS publication 502. You may visit the website at
http://www.irs.gov/pub/irs-pdf/p502.pdf.
Dependent care costs
Pre-tax dollars may be set aside for day care type expenses for eligible children or adults.
Expenses are eligible if they’re for the care of the person under age 13, or an older dependent
who is unable to care for themselves. They must regularly spend at least eight hours a day in
your home.
Restricted Healthcare Reimbursement Accounts are also available with certain high
deductible healthcare plans. Before you meet your deductible, your limited FSA funds are
available only for dental, vision and hearing expenses not covered under your health plan. Once
you meet your health plan’s deductible, you can use your limited FSA for reimbursement of all
FSA-qualified healthcare expenses incurred post-deductible, just like a standard healthcare
FSA.
Maximize your savings potential!
When you enroll in an FSA, you designate in advance the amount of money you wish to have
deducted from your salary and deposited into your FSA over the length of a year. To do this,
you must estimate in advance the annual costs you want your FSA to cover.
Your FSA will save you money. The pre-tax deduction means that your payroll taxes (federal,
state and Social Security) are decreased and your take-home pay is increased. Your gross
earnings are adjusted to account for the amounts withheld, and your tax percentage is applied
to a lower amount of income.
If you underestimate, you will deplete the FSA before the end of the year, losing some of your
tax-savings potential. If you overestimate and there is money left in your FSA at the end of the
year, you will unfortunately forfeit the money.
