The City offers Flexible Spending Accounts (FSA) administered through TASC. The FSA plan year is from April 1 to March 31.
If an employee or their family has predictable health care or work-related day care expenses, then he/she may benefit from participating in an FSA. An FSA allows employees to set aside money from their paycheck for reimbursement of health care and day care expenses that they regularly pay. The amount set aside is not taxed and is automatically deducted from the employee’s paycheck and deposited into the FSA. During the year, the employee has access to this account for reimbursement of some expenses that are not covered by insurance. Participation in an FSA allows for substantial tax savings and an increase in spending power. Participating employees must re-elect the dollar amount they wish to have deducted each plan year. There are two types of FSAs:
Health Care FSA
This account allows participants to set aside up to an annual maximum of $2,750 ($114.58 bi-weekly deduction). This money will not be taxable income to the participant and can be used to offset the costs of a wide variety of eligible medical expenses that generate out-of-pocket costs. Participating employees can also receive reimbursement for expenses related to dental and vision care (that are not classified as cosmetic).
A sample list of qualified expenses eligible for reimbursement include, but are not limited to, the following:
- Ambulance service
- Chiropractic care
- Dental and orthodontia
- Diagnostic tests/health screenings
- Physician fees and office visits
- Drug addiction/alcoholism treatment
- Experimental medical treatment
- Corrective eyeglasses and contact lenses
- Hearing aids and exams
- Injections and vaccinations
- LASIK surgery
- Mental health care
- Nursing services
- Optometrist fee
- Prescription drugs
- Medically necessary sunscreen
Dependent Care FSA
This account allows participants to set aside up to an annual maximum of $5,000 ($208.33 bi-weekly deduction) if the participating employee is single or married and file a joint tax return ($2,500 if they are married and file a separate tax return) for work-related day care expenses. Qualified expenses include day care centers, preschool, and before/after school care for eligible children and adults Please note that if a family’s income is over $20,000, this reimbursement option will likely save participants more money than the dependent day care tax credit take on a tax return. To qualify, dependents must be: A child under the age of 13 or a child, spouse, or other dependent that is physically or mentally incapable of self-care and spends at least 8 hours a day in the participant’s household.
Dependent Care Expenses:
- Fees for licensed day care or adult care facilities
- Before and after school care programs for dependents under age 13
- Nanny expenses attributed to dependent care
- Nursery school (preschool) fees
- Summer Day Camp - primary purpose must be custodial care and not educational in nature
- Late pick-up fees
- Amounts paid for services (including babysitters or nursery school) provided in or outside of the employee’s home
Visit the IRS website for additional details regarding qualified and non-qualified expense.