FLEXIBLE SPENDING ACCOUNT (FSA)

What is an FSA?

Lets find out!

What is an FSA?

A Flexible Spending account (FSA) allows employees to set aside a portion of their salary on a pre-tax basis. The money can then be used to reimburse yourself for qualified health care and/or dependent care expenses. Your taxable salary is reduced by the amount you set aside in your account(s), so you pay lower income taxes and Social Security taxes.

In other words, you reduce your taxable income and pay yourself back for health and or dependent care costs your incur.

FSA Elections

Participation in the FSAs is voluntary. Employee’s decide whether to participate and how much money to set aside, within the minimums and maximums show below.

  Health Care Account Dependent Care Account

Your maximum annual contribution $5,000 $5,000*

Your minimum annual contribution $200 $200

Your minimum reimbursement

amount $20 $20

Annual claim submission deadline

All claims incurred between January 1st thru December 31st must be received at Aetna by

February 15, each year.

All claims incurred between January 1st thru December 31st must be received at Aetna by

February 15, each year.*Additional limits on Dependent Care FSA contributions.

Who is eligible?

Eligibility

• Regular full time/ part time NAF civilian employee• Scheduled to work at least 20 hours per week

• Within 31 day window (from date of hire or eligible status change) or annual enrollment period

• Flexible employees are NOT eligible

• You must enroll each year

• You can enroll in one or both FSA’s

Eligibility cont…

• You are not required to be enrolled in a DoD NAF medical plan

• Some employees deemed “Highly Compensated” may be restricted in the amount they are able to defer to the Dependent Care FSA as a result of non-discrimination testing*

We do not offer a debit card option!

Can changes be made to FSA election?

FSA Election Changes

FSA ELECTION CHANGES AVAILABLE WITHIN 31 DAYS

Qualified Family Status Change

Health Care FSA Dependent Care FSA

Marriage Enroll, Increase, Decrease Enroll, Increase

Divorce Enroll, Decrease Enroll, Decrease

Death of Spouse Enroll, Increase, Decrease Enroll, Increase, Decrease

Birth/Adoption of child Enroll, Increase Enroll, Increase

Gain custody/guardianship of child

Enroll, Increase Enroll, Increase

Death of child Decrease Decrease

Lost custody/guardianship of child

Decrease Decrease

FSA Election Changes cont…

FSA ELECTION CHANGES AVAILABLE WITHIN 31 DAYS

Qualified Family Status Change

Health Care FSA Dependent Care FSA

Dependent child no longer eligible for health coverage

Decrease N/A

Dependent care cost has changed

N/A Increase, Decrease

Spouse lost health coverage under another plan

Enroll, Increase Enroll, Increase

I’m no longer covered under spouse’s health plan

Enroll, Increase Enroll, Increase

Change in number of tax dependents

Enroll, Increase, Decrease Enroll, Increase, Decrease

If you don’t report the family status change within the 31-day period, you will not be allowed to make the change until the next FSA open enrollment period.

Cutoff on Enrollments & Increases

Effective October 1st through December 31st of each Plan year, the following actions will not be allowed for the current year:

• Enrollments, whether due to new hire event or qualifying Family Status Changes

• Increases due to Family Status Changes

What happens to an FSA during a leave of

absence?

Paid Leave of Absence

Participation in the FSAs will not be affected during a paid leave of absence. Payroll deductions will continue, and the FSA’s can still be used to reimburse eligible expenses.

Unpaid Leave of Absence

• Contributions/participation in the FSA stops on first day of absence.• You can continue to be reimbursed for expenses incurred while you were actively working.• You cannot be reimbursed for expenses incurred during the unpaid leave of absence.• Any balance in your account made before leave of absence can be used for claims incurred upon your return to work.

Returning from a Unpaid Leave of Absence

Upon return, the contributions required to meet the election for the Plan year will be recalculated (and therefore will increase) over the remaining pay periods in the year.

Health Care FSA - Employee will be reinstated fully in the HCFSA Plan (retroactive to the date absence began). After reinstatement, they may request reimbursement for expenses incurred at anytime in the year when enrolled.   Dependent Care FSA – Employee will be reinstated in the DCFSA Plan as of the date of return. They may request reimbursement for expenses incurred at anytime in the year when enrolled, except those incurred during a period of unpaid leave of absence.

When employment ends….

When Employment Ends

• When employment ends, FSA contributions end.

• You can still be reimbursed for expenses incurred up to your last day worked, provided balance is sufficient.

• You have until February 15th of the next year to submit claims.

Rehires

If you terminate employment with MCCS, and are rehired as regular full time, or regular part time, your will automatically be re-enrolled into the FSA plan that you were enrolled in prior to termination. The bi-weekly contribution will be recalculated based on the initial annual election amount.

USE IT OR LOSE IT!February 15th is the cutoff to submit claims incurred by December 31st of the prior year.

What happens to forfeited funds?

• Used to offset expenses of terminated participants

that used their benefits before paying full election into FSA• Used to offset administrative expenses

Changes due to:

Health Care Reform Changes

Health Care FSA:

• Expenses for Over the counter (OTC) medicines will only be reimbursed from an FSA if used of the medicine has been prescribed by a doctor, effective January 1, 2011. Other OTC items are still reimbursable.

• Effective January 1, 2013, the new maximum deferral limit for the Health Care FSA will be $2,500.

Non-discrimination Testing

Non-discrimination testing

• IRS established nondiscrimination tests for HCFSA

& DCFSA• Determine if the plan discriminates in favor of highly compensated employees (HCE’s)• Conducted in February• Consequences of failing:

• HCE’s will have to reduce their deferral election to meet to meet requirements to pass testing• Ensures HCE’s do not have a greater

opportunity than NON-HCE’s

Enrollment Statistics

2011 FSA ENROLLMENTS

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60

80

100

120

2011 vs 2012 Enrollments

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140

2011 2012

Data as of March 2012

2011 Plan Experience

Employee Participation

Number of Participants

Health Care 234Dependent Care 19Both Health and Dependent Care 26

Total Participants 279

2011 Year End Contribution and Balance

Summary

Health Care Dependent Care Total

EE Contributions $346,124.81 $148,440.26 $494,565.07 Reimbursements $326,558.17 $146,609.73 $473,167.90

Plan Balance $ 19,566.64 $ 1,830.53 $ 21,397.17

Unused Funds

Health Care Dependent Care Total

Total Unused Funds $27,643.92 $ 1,830.53 $29,474.45

Number of Participants 66 7 73

Negative Balance Summary

(Health Care Only)**

TotalAmount Lost to Plan as Resultof Negative Balances $8,077.27

Number of Participants with aNegative Balance at Year End 19

FSA ENROLLMENT CONTEST !!!!

FSA ENROLLMENT CONTEST !!!!

Communicating the Benefit of an FSA!

• Member education• Brainshark – www.usmc-mccs.org/employ/benefits/fsa.cfm

• FSA Calculator – www.aetnafsa.com

• Q & A Documents – (on Crossroads)

• Valuable benefit• Understand the benefit!