Full-time employees can redirect a portion of their pay through payroll deduction into a Health Care and/or Dependent Care Flexible Spending Account (FSA) administered by Clarity Benefit Solutions (Clarity) in partnership with General Agency. An FSA is a tax-favored program offered by employers that allows employees to pay for eligible out-of-pocket health and dependent care expenses with pre-tax dollars. By using pre-tax dollars to pay for eligible health and dependent care expenses, an FSA gives employees an immediate discount on these expenses that equals the taxes they would otherwise pay on that money.
Read below for detailed information about this benefit:
All full-time employees are eligible to enroll in the Flexible Spending Account (FSA). The FSA is also not tied to any medical plan, so employees do not have to be enrolled in a specific medical plan to enroll in the FSA.
Employees can use the funds in the account on themselves and on eligible dependents, as defined by the Internal Revenue Service (IRS):
HEALTH CARE FSA
For the Health Care FSA, eligible dependents are defined in the IRS Publication 969, which includes a spouse and all dependents who can be claimed on the employee's federal tax return.
DEPENDENT CARE FSA
For the Dependent Care FSA, eligible dependents are defined in the IRS Publication 503, which includes a qualifying dependent child who is under age 13 and a spouse or other qualifying dependent (or relative) who is physically or mentally incapable of self-care.
What is the Health Care FSA?
The Health Care Flexible Spending Account (FSA) allows you to pay for certain out-of-pocket health expenses, such as doctor visits, dental and vision care, and prescriptions, with tax-free dollars. The money that is contributed into the FSA is deducted from pay on a pre-tax basis, decreasing taxable income. The funds, when spent on IRS-qualified health expenses, are also not taxed. Each year, the employee has the opportunity during LCC's Open Enrollment to sign up for the FSA and decide how much to contribute up to a maximum limit for the next calendar year (plan year). Funds do not roll over from year to year.
What is the Dependent Care FSA?
The Dependent Care Flexible Spending Account (FSA) allows you to pay for certain dependent care expenses, such as daycare, before and after school care, and elder care, with tax-free dollars. The money that is contributed into the FSA is deducted from pay on a pre-tax basis, decreasing taxable income. The funds, when spent on IRS-qualified dependent care expenses, are also not taxed. Each year, the employee has the opportunity during LCC's Open Enrollment to sign up for the FSA and decide how much to contribute up to a maximum limit for the next calendar year (plan year). Funds do not roll over from year to year.
Annual Contribution Limits
Employees choose the annual amount to contribute into the account up to the annual limits below:
|FSA Annual Contribution Limits
|Health Care FSA
|Dependent Care FSA
The annual amount elected by the employee will be evenly spread and deducted from the total number of paychecks in the calendar year or from the remaining paychecks in the calendar year for mid-year enrollments.
If an employee does not have sufficient pay on their paycheck to cover payroll-deducted contributions, invoicing is used to collect any missed contributions. An employee could have insufficient pay due to situations such as an unpaid leave of absence or not having scheduled work in a pay period. Check out the LCC Employee Benefits Invoicing webpage for more details.
What types of eligible expenses can I use my FSA funds for?
HEALTH CARE FSA
The funds in your Health Care FSA can pay for expenses that fall under the IRS category of "medical expenses." Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body. These expenses can be the products or services you usually pay for out of pocket such as items not reimbursed by insurance (i.e. deductibles and copays). Examples of eligible expenses are doctor visits, dental care, vision care, prescription medicines, over-the-counter medicines, menstrual care products, first aid supplies, and so much more! A complete list of eligible expenses can be found in the IRS Publication 502.
DEPENDENT CARE FSA
The funds in your Dependent Care FSA can pay for child care or adult IRS-eligible dependent care expenses that are necessary to allow you or your spouse to work or attend school full-time. It also pays while you or your spouse look for work; however, it does not pay if you (or your spouse) did not find a job and have no earned income for the year. The Dependent Care FSA does NOT pay for medical care for your dependents. The funds may also NOT be used for summer overnight camps or for long-term care for parents who live elsewhere. A complete list of qualified child and dependent care expenses can be found in the IRS Publication 503.
When are funds available to use on eligible expenses?
HEALTH CARE FSA
Your full annual election amount is available* on the first day of the plan year or on your coverage effective date for mid-year enrollments.
*There could be a slight processing delay for fund availability based on the timing of enrollment during an Initial Enrollment Period or a Life Event.
DEPENDENT CARE FSA
Your funds are available only as they are accrued, per payroll deduction.
How do I pay for my eligible expenses?
There are two ways to pay for eligible expenses:
- FLEX CARD. Employees who enroll in the FSA will receive a debit card to easily pay for eligible expenses. This card can be used at any provider or merchant that accepts the debit card. Present this card to your doctor's office, pharmacist, or other service provider when paying for eligible expenses. The amount will be deducted from your FSA account. You should use the "Credit" option when using the card and maintain all receipts for your records.
- SUBMIT A CLAIM. If you choose to pay for the service out of pocket, you can then submit a claim form (either by fax or mail) to the FSA administrator, Clarity Benefit Solutions. You can also submit a reimbursement request online through the Clarity portal or Clarity app. You will receive a reimbursement check by mail or you can have the reimbursement deposited directly into your bank account. Claims are processed weekly.
Important FSA Deadlines
The FSA is a "use it or lose it" account. Contributed funds are only available to be used on eligible expenses during the plan year or applicable grace period. The plan year for the FSA is the calendar year (January 1 to December 31). Any leftover funds do not rollover into the next plan year and are forfeited to the employer if unspent by the below deadlines.
2023 Plan Year Deadlines
The Grace Period is an extended period of coverage at the end of every plan year that allows you extra time to incur expenses to use your remaining FSA balance after the close of the plan year. Remaining funds must be used within two and a half months of the plan year end. For the 2023 plan year, you have until March 15, 2024, to incur eligible expenses.
RUN OUT PERIOD
You have until May 31, 2024, to submit claims for expenses incurred during the plan year or grace period. Any funds in your account after May 31, 2024, will be forfeited.
2024 Plan Year Deadlines
The Grace Period is an extended period of coverage at the end of every plan year that allows you extra time to incur expenses to use your remaining FSA balance after the close of the plan year. Remaining funds must be used within two and a half months of the plan year end. For the 2024 plan year, you have until March 15, 2025, to incur eligible expenses.
Run Out Period
You have until May 31, 2025, to submit claims for expenses incurred during the plan year or grace period. Any funds in your account after May 31, 2025, will be forfeited.
Can I enroll in an FSA and an HSA?
If you enroll in the Health Care FSA, you are disqualified from contributing to a Health Savings Account (HSA). You can, however, be enrolled in a Dependent Care FSA and contribute to an HSA.
Visit the Health Savings Account (HSA) webpage to learn more about the HSA and its similarities and differences to the FSA.
My Account Resources and Forms
Request for Reimbursement Form
Clarity Account Portal
You can check your account balance(s), review claims history, submit claims, and access helpful plan tips and information at any time by logging onto the Clarity online portal or mobile app (search for Clarity Benefits in the Apple or Google Play stores).
Employee ID: Your full Social Security number
Employer ID: BENGALACC
Streamline Transactions with Clarity BenefitConnect
Want to significantly reduce the need for submitting documentation to substantiate card transactions? Clarity offers a powerful program called BenefitConnect, which links their platform to your insurance carrier to access your online EOBs to match transactions. This will significantly reduce the number of transactions that require action on your part to provide documentation. Enrolling in BenefitConnect is easy and accessible on the Clarity portal. You will simply provide your username and password for your medical, dental and/or vision insurance provider’s portal, and the technology will do the rest.
Frequently Asked Questions
FSAstore.com is an online marketplace with thousands of Health Care FSA-eligible products, such as sunscreen, bandages, blood glucose meters, blood pressure monitors, thermometers, and so much more! You simply create an account, as you would with websites like Amazon.com, and start shopping. If certain items require a prescription for eligibility per IRS regulations, they will have a blue "Rx" logo. Otherwise, items listed with a check mark are FSA-eligible and do not require a prescription.
Contact your HR Benefits Team at LCC-HR-Benefits@star.lcc.edu