Flexible Spending Accounts Frequently Asked Questions (FAQs)
How do Flexible Spending Accounts work?
With a Flexible Spending Account (FSA), you will be able to pay for certain health care and dependent care out-of-pocket expenses with before-tax dollars. The salary reductions that you designate for health care or dependent care expenses are accumulated in a "reimbursement account" on your behalf, pending submission of claims for reimbursable expenses. (You cannot "lump" your reduction to correspond to a particular part of the year. Instead, the annual reduction is divided into equal payroll reductions throughout the year.) Expenses are reimbursed until the cumulative total equals the annual amount designated.
You may participate in the Health Care (Medical/Dental) Expense Reimbursement Account and/or the Child/Dependent Care Expense Reimbursement Account. To enroll or re-enroll in an FSA for 2010, log in to the University portal (www.yale.edu/portal) and click "My Benefits."
Please note: For 2010, Your Spending Account (YSA) will replace ADP as the Flexible Spending Account (FSA) administrator.
What is the grace period extension?
If you are currently enrolled in a 2009 Health Care (Medical/Dental) and/or Child/Dependent Care Expense Reimbursement Account, you will be able to incur eligible medical and dependent care expenses up to March 15, 2010, and still be reimbursed from your 2009 accounts.
Important: You should continue to submit FSA claims for 2009 to the current FSA administrator, ADP. Go to www.flexdirect.adp.com to access your information. You can also go to the Employee Self-Service on www.yale.edu/benefits. Claims for 2010 should be submitted to Your Spending Account (YSA). In other words, if you incur an eligible FSA expense in 2009, you should request reimbursement from ADP. Claims you incur in 2010 should go to YSA.
There is an exception to this rule. It applies if you have money left in your 2009 FSA as of December 31, 2009. In that case, you have an additional two and one-half months to incur eligible expenses and request reimbursements from your 2009 account. If you are in this situation and you incur and eligible FSA expense between January 1, 2010, and March 15, 2010, you need to submit the reimbursement request to ADP. If you submit the request to YSA, it will apply to your 2010 FSA.
When can I enroll or make changes to my Flexible Spending Account elections?
Eligible employees may enroll and/or make changes to their Flexible Spending Account election(s) during the Flexible Spending Account (FSA) Annual Enrollment period, which runs from December 1 through December 31, 2009. Changes become effective for January 1, 2010. Since FSA election(s) do not carry forward from year to year, employees who wish to participate must re-enroll annually.
New employees or those who have undergone a change in qualifying life event may also enroll and/or appropriately revise their FSA reduction amount(s) within 30 days of their date of hire or qualifying life event. Additional requirements may apply.
How much can I expect to save?
Depending on total family income, you are likely to save more than 20% and perhaps up to 40% of your cost. The percentage you save depends on your federal and state tax brackets.
How will I be reimbursed for 2009 claims?
If you did not choose the automatic reimbursement of claims feature, you will need to submit a paper form for 2009 claims. You will also need appropriate documentation, which consists of verifiable receipts, itemized statements or other evidence of covered expenses (identifying the name of the person treated, dates and descriptions of services performed and the amount of the expense). However, cancelled checks and credit card receipts alone are not accepted as appropriate documentation. Upon approval of the expenses, reimbursement will be sent directly to you. Refer to the ADP website for more information.
If you selected the automatic reimbursement of claims feature for submitting claims when you enrolled for a 2009 Flexible Spending Account, you authorized Yale to allow both medical and dental carriers to submit your co-pay, deductible and coinsurance information directly to ADP for reimbursement from your Medical/Dental Reimbursement Flexible Spending Account.
How will I be reimbursed for 2010 claims?
When you enroll for 2010, you will have the option to choose automatic reimbursement of claims. By enrolling in this feature, you are authorizing Yale to allow both the medical and dental carriers to submit your co-pays, deductible and coinsurance information directly to Your Spending Account (YSA) for reimbursement from your Medical/Dental Reimbursement Flexible Spending Account. If you do not choose automatic reimbursement of claims, you will need to submit a paper form and provide the appropriate documentation. Go to the ADP website to access your information.
Please note: Do not sign up for this feature if you expect to have a 2009 balance at the end of December. This will ensure that your 2010 claims (incurred during the grace period) are not automatically paid from your 2010 reimbursement account. You can sign up for this feature at any time in the future by contact the Employee Service Center at 1-203-432-5552.
Things to consider when choosing this option:
- You can opt in or out of this feature at any time during the calendar year by contacting the Employee Service Center.
- Spousal and dependent claims information will also be transmitted each month. However, if you have a dependent child between the ages of 19 and 25 enrolled in the Yale Health Plan, claims will not be transmitted automatically and you will need to file claims directly with YSA.
- Over-the-counter medications and vision expenses must be submitted to YSA directly.
- Do not submit claims for out-of-network medical expenses directly to YSA. These types of expenses will be sent to YSA via the automatic reimbursement of claims (if selected).
- Do not select this feature if you have a secondary insurance program.
- Do not select this feature if you are covering a civil union partner under your health insurance or if you are enrolled in a Health Savings Account as part of a high-deductible health insurance plan.
- Reimbursements can be delayed up to 60 days due to when the provider submits the claim to the carrier.
Can I receive a refund of my unused balance if my expenses are less than the amount elected for salary reduction?
No; you cannot receive a refund if your expenses are less than you estimate. Therefore, please calculate your anticipated expenses very carefully.
Who is a "qualifying dependent" for health care (medical/dental) reimbursement?
For health care (medical/dental) reimbursement, under Section 152, a "qualifying dependent" includes any individual who, "for the taxable year of the taxpayer, has as his principal place of abode the home of the taxpayer and is a member of the taxpayer's household" AND, for whom, "half of whose support, for the calendar year in which the taxable year of the taxpayer begins, was received from the taxpayer."
Who is a "qualifying dependent" for child/dependent care?
A qualifying dependent is:
a) a dependent of the participant who is under 13 and for whom the participant may claim a personal exemption, or
b) a dependent (including a person the participant could claim as dependent except that the person has gross income of $3,500.00 or more) who is physically or mentally unable to care for himself or herself, or
c) a spouse who is physically unable to care for himself or herself.
Which expenses are for household services or for the care of a qualifying dependent?
An IRS guidebook about the dependent care tax credit describes types of work-related expenses that qualify for the credit. The expenses described in the following excerpts from that guidebook qualify for reimbursement under the Program:
Expenses for the care of a qualifying person. The main reason for expenses for the care of a qualifying person must be for the person's well-being and protection. This does not include amounts you paid for food, clothing, or schooling. However, if these amounts cannot be separated from the cost of caring for a qualified person, you may take the total cost. For example, if a nursery school or day-care center provides lunch and educational services as a part of their preschool child care services, you may take the entire cost. You may not take the cost of schooling in kindergarten or higher. You must divide the total cost between the cost of caring for the child before and/or after school and the cost of the schooling.
You may take the cost of care provided outside your home if the care was for your dependent under age 13 or for any other qualifying person who regularly spends at least 8 hours each day in your household. Care that is provided outside your home by a dependent day care center can be counted provided the center complies with all the applicable state and local regulations.
A dependent care center is a place that provides care for more than six persons (other than persons who live there) and receives a fee, payment or grant for providing services for any of those persons, regardless of whether or not the center is run for profit.
The cost of getting a qualifying person to and from your home and the care location is not considered a work-related expense. This includes the costs of bus, subway, taxi, or private car.
May child/dependent day care expenses be claimed for payments to relatives?
Expenses may not be claimed if the payment is made to a participant's child under 19 or to a dependent for whom a personal exemption deduction is claimed. Expenses may be claimed, however, if the payment is to a relative who is not a dependent, even if he or she lives in the participant's home.
What is the maximum amount of reimbursement for child/dependent day care?
Reimbursable expenses during the calendar year for a participant are limited to the lesser of participant's or the spouse's earned income (if the participant is married) for that year. If the spouse is a full-time student (at least five months a year) or incapable of caring for him- or herself, the spouse is treated as having at least $250 of earned income in a month if there is one qualifying individual for whom expenses are claimed, or $500 if there are more than one.
Are payroll premium payments for medical, dental and life insurance automatically tax sheltered?
To achieve tax savings, Yale employees pay their premiums for medical, dental and the first $50,000 of life insurance with pre-tax dollars. Unless you instruct the University in writing not to do so, salary reductions will be automatically instituted to pay your share of these premiums.
What types of health care expenses qualify?
Any medical or dental expenses that would qualify for purposes of federal income tax deduction would also qualify for reimbursement under this program, such as prescription drugs, doctor visit copays, dental services, chiropractic procedures, eyeglasses and contact lenses, laser eye surgery, hospital and nursing home charges, as well as Yale COBRA insurance premiums. In addition, certain over-the-counter medications are eligible, including antacids (such as Zantac and Prilosec), allergy medicine (such as Claritin), cold medicine and pain relievers used to treat a specific medical condition will qualify.
In general, certain cosmetic medical or dental procedures and non-Yale health insurance premiums are prohibited from the program. Dietary supplements are also ineligible, unless medically necessary to treat a specific illness or injury (doctor's note required). Toiletries are excluded.