Flexible Spending Accounts
Formerly called Personal Spending Accounts at Vanderbilt. We have changed the name to correspond with the Internal Revenue Service and PayFlex names.
Click here for FSA/HRA Frequently Asked Questions
Flexible Spending Accounts (FSAs) enable you to set aside some of your pay, on a pre-tax basis, into an account to pay for eligible health care or dependent care expenses. "Pre-tax" means you do not pay Federal income or FICA taxes on the amount of money you put in the FSA. You save money by paying less tax. For reimbursement from your FSA account(s), you submit a claim form and required documentation to the spending account administrator, PayFlex Systems USA, Inc.
There are two types of Flexible Spending Accounts at Vanderbilt:
- Health FSA reimburses items such as eyeglasses, co-payments, prescriptions and over-the-counter drugs—any eligible health care expenses that are not covered by a benefit plan. You can contribute up to a maximum of $3,600 or a minimum of $104 each calendar year to a Health FSA.
- Dependent Care FSA reimburses the cost of day care expenses for your children (under the age of 13) or other eligible dependents. The day care must be used as a means to allow you and/or your spouse to be gainfully employed. You can contribute up to a family maximum of $5,000 (for married couples filing jointly) or a minimum of $104 each calendar year to a Dependent Care FSA.
Notice for Highly Compensated Faculty and Staff Who Elect a Dependent Care FSA:
The Internal Revenue Code (IRC) allows pretax contributions to FSAs as long as the benefit does not favor highly compensated employees (HCEs). You are considered "highly compensated" if your gross earnings are above the annual amount set by the Internal Revenue Service (in 2008 that amount was $105,000).
In accordance with IRC regulations, Vanderbilt’s Office of Benefits Administration examines Dependent Care FSA elections each year to ensure that the benefit does not disproportionately benefit HCEs and that the Plan remains compliant. If the benefit is found to “discriminate” against non-highly compensated employees, Vanderbilt University will reduce contributions made by HCEs to a level that enables compliance with the IRC. If the Dependent Care FSA fails the test for the year, HCEs will be taxed on the pretax deductions contributed to their Dependent Care FSA during that calendar year. Non-highly compensated employees are not affected by this rule.
Initial enrollment must be completed within three months of hire date. FSA eligibility begins on the first day of the month after three months of employment (or on January 1 for those who elect a FSA during Open Enrollment). Payroll deductions begin upon the first paycheck after eligibility. The money contributed to your FSA account must be used during the calendar year; it does not carry over from year to year. Money not used will be forfeited. Please plan carefully.
To continue a FSA each calendar year, you must request FSA enrollment during the benefits Open Enrollment period each fall.
IRS 2½-Month Extension Allowed For FSAs
The Internal Revenue Service allows expenses incurred during a two-and-a-half-month grace period after the end of the plan year to count against the previous year's FSA. This means that expenses incurred between January 1 and March 15 can be claimed against your prior year balance.
Participants cannot use the Health Care debit card after January 1 to access the prior year's funds. To access prior year funds, you must pay for the eligible expense out-of-pocket and then file a paper claim form by the April 15 deadline.
For More Information
- Flexible Spending Account Summary Plan Description is listed on the Forms and Documents page
- View the FSA/HRA FAQs
- Read Internal Revenue Service Publication 502 "Medical and Dental Expenses "
- Read Internal Revenue Service Publication 503 "Child and Dependent Care Expenses"
- Read Internal Revenue Service Publication 969 "Health Savings Accounts and Other Tax-favored Plans" (refer to Publication 969's page 14 for our Flexible Spending Account and page 15 for our Health Reimbursement Account)
For complete details of the Flexible Spending Account benefit, refer to the “Flexible Spending Account Summary Plan Description" on the Forms and Documents page.
Contact Information
PayFlex Systems, Inc.
http://vanderbilt.payflex.com
Customer Service 800.284.4885
WageWorks (administration of the FSA ended December 31, 2008)
www.wageworks.com
Customer Service 877.WAGEWORKS (877.924.3967)
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