19 Financial Protection Flexible Spending Accounts If you are not already participating in the company’s Flexible Spending Accounts (FSAs) for health care and/or dependent care expenses, you may be missing an opportunity for significant tax savings. There are three types of FSA’s — a Health Care FSA, Limited Purpose FSA and Dependent Care FSA. You are eligible for the Limited Purpose FSA only if you participate in a Health Savings Account. All three FSAs let you use pre-tax dollars to pay eligible out-of-pocket expenses not covered by other insurance plans. Annual elections are “use it or lose it” so estimate wisely. Key features of each FSA are highlighted below. Type of FSA Eligible Expenses Pre-tax Contribution Health Care FSA Most medical, dental and vision care expenses that are not covered by your health plan, such as deductibles, copays, eyeglasses and doctor-prescribed over the counter medications. Up to $2,850 per year Limited Purpose FSA Dental and vision care expenses that are not covered by other insurance plans, such as deductibles, copays and eyeglass expenses that exceed plan limits. Up to $2,850 per year Dependent Care FSA Dependent care expenses such as daycare, summer camp, after school programs or elder care programs so you and your spouse can work or attend school full-time. Up to $5,000 per year ($2,500 if married and filing separate tax returns) Health Care FSA A Health Care FSA gives you a tax break on many expenses that are not reimbursed by any other health plan, such as deductibles, copays, coinsurance, vision expenses, and more. You must enroll each year, as contribution amounts are not carried forward from one year to the next. You can set aside up to $2,850 each plan year on a pre-tax basis to cover eligible health care expenses. Limited Purpose Health Care FSA (for use with Health Savings Account) If you participate in a Health Savings Account (HSA), you can maximize your tax savings by also participating in a Limited Purpose Flexible Spending Account (FSA) that covers dental and vision expenses only. A Limited Purpose Health Care FSA is a great way to conserve your HSA funds and still benefit from tax savings. You may contribute up to $2,850 each plan year on a pre-tax basis to cover eligible dental and vision expenses. More information is available on the benefits website at www.ensignbenefits.com. Dependent Care FSA The Dependent Care Account can be used for dependent care and elder care expenses that enable you (or you and your spouse) to work or attend school full-time. Eligible expenses include daycare, preschool programs and after-school care for qualifying children under age 13. They also include elder care or care for qualifying dependents and qualifying relatives of any age who are living with you and not capable of self-care. The amount you contribute to a Dependent Care FSA cannot be greater than your income or your spouse’s income, whichever is less. If your spouse contributes to a Dependent Care FSA through his or her employer, your combined contributions may not exceed $5,000. If you are married and file separate tax returns, you can contribute up to $2,500 per year. Have Questions About Flexible Spending Accounts? ALEX can help. Go to https://www.myalex.com/ensign/2022.
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