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FSAs are voluntary accounts that help you set aside money to pay for expenses not covered by other benefit programs. During the enrollment period, employees may enroll in a Health Care FSA and/or a Dependent (Day) Care FSA. FSAs include your payrol l contributions only; the University does not contribute. Your contributions are not subject to federal or Delaware income taxes, nor to Social Security, which results in tax savings on those contributions. When you incur eligible health- or day-care expe nses, you submit a claim form and supporting documentation to Benefits Services and receive reimbursement from your FSA account(s). In effect, you pay for your health- and/or day-care expenses with tax-free dollars.
The IRS does impose restrictions on these accounts. Therefore, it is important that you be conservative in estimating the withholding amount for your FSA. Federal regulations prohibit you from changing that amount during the plan year unless you experienc e a life event (e.g., marriage, divorce, birth of a child, change in spouse's employment). Also the change must be made on account of and be consistent with the life event. In addition, there is the risk of forfeiture if you fail to incur enough eligible health- or day-care expenses for reimbursement.
The maximum annual amount you can contribute to a Health Care account is $1,500. The Dependent (Day) Care account is limited to an annual amount of $5,000, assuming you and your spouse file joint tax returns and each of you earns more than $5,000 per year . If you file separate income tax returns, your Dependent (Day) Care maximum is $2,500.
You can be reimbursed from your FSA account for expenses you and your family incur during the time you are making contributions to the account. It is the date of service that determines eligibility of the expense, not the date of your billing or payment. Examples of items that may be submitted for reimbursement from your Health Care account are deductibles and co-payments for medical and dental expenses, amounts exceeding annual plan maximums, and services not covered by your plan such as eyeglasses and c ontact lenses. Health-care expenses are reimbursed in full up to the maximum of your annual FSA contribution, regardless of whether there is enough money in your account to cover the entire claim when it is submitted.
You may use the Dependent (Day) Care account to reimburse yourself for eligible day-care expenses that enable you and your spouse to be gainfully employed. These expenses must be for children under the age of 13, your spouse (if he or she is disabled) or a parent who depends on you for more than one-half of his/her support and who spends at least eight hours a day in your home. Eligible expenses include, but are not limited to, preschools, dependent day-care centers, after-school programs and summer day c amps. Dependent day-care expenses are reimbursed up to the maximum accumulated amount in your account at the time the expense is processed by Benefits Services.
If not reimbursed in full, you would continue to receive reimbursements on succeeding paydays until the claim balance is fully paid.