Benefits Spotlight – Flexible Spending Accounts: Healthcare & Dependent Care

RCUH offers eligible employees (regular-status, 50% FTE or more) the opportunity to enroll in a Flexible Spending Account (FSA). An FSA is an employer-sponsored employee benefit program that allows employees to set aside pre-taxed dollars to pay for eligible expenses on a reimbursement basis. Contributions will be deducted from the employee’s paycheck and deposited into their National Benefit Services (NBS) Account. Amounts contributed are not subject to federal income tax, Social Security tax, or Medicare tax. Employees access the funds from their NBS Account to reimburse themselves for eligible expenses they paid for out-of-pocket. FSAs are a “Use It or Lose It” qualified benefit in accordance with the IRS code. Any unused funds at the end of the plan year (June 30th) will be forfeited (no carryovers allowed).

IMPORTANT: FSAs may not be advantageous for everyone. Healthcare-related expenses paid for with an FSA cannot be claimed on an annual income tax return. Consult your tax advisor to see how this works with or affects your taxes and help you decide if this option could be beneficial for your situation. RCUH will not provide any tax advice.

Our FSA is administered by the National Benefit Services (NBS). RCUH’s FSA has two different accounts:

  • FSA Healthcare – for eligible medical, dental, vision expenses only
    • The FSA Healthcare can be used for to pay for (predictable and foreseeable) eligible out-of-pocket healthcare-related expenses for you, your spouse, and your tax dependents (including children under the age of 26).
    • The IRS determines eligibility of “qualified medical expenses” – must be for the primary purpose of diagnosing, treating, curing, mitigating, or preventing a medical condition. Allowable expenses include copayments, coinsurance, deductibles, qualified prescription drugs, insulin, and medical devices. Certain medical products and services require a “letter of medical necessity” or LMN in order to be eligible.

      Cosmetic expenses, things for general health (like gym memberships and multivitamins that are not for a medical condition), and insurance premium payments are not eligible.

      Be sure to take the time to research what is and is not eligible.
      See The Complete FSA (Healthcare) Eligibility List, IRS FAQ about medical expenses, and Learn About Letter of Medical Necessity.
  • FSA Dependent Care – for eligible work-related childcare or daycare expenses only
    • The FSA Dependent Care can be used to pay for childcare expenses for your children under the age of 13 and/or day care expenses for your qualifying family member who you claim as a tax dependent.
    • The IRS determines eligibility of dependent care expense – must be a work-related expense and for the care of a qualifying person only if their main purpose is the person’s well-being and protection. Allowable expenses include preschool, before and after school programs, and daycare.

      Education expenses (schooling for a child in kindergarten and above), child support payments, expenses that are not work-related (babysitting while you go to the movies) are not eligible.

      You must identify all persons or organizations that provide care for your child or dependent on Form 2441 when filing your taxes, so be sure to consult your tax advisor to see if you and your family are eligible and if this benefit is right for your situation. RCUH will not be able to assist you with taxes.
      See IRS Publication 503, IRS Child and Dependent Care Credit & and Flexible Benefit Plans, IRS FAQ Child and Dependent Care Credit & Flexible Benefit Plans.

Read: FSA Frequently Asked Questions

Did You Know? The IRS determines eligibility of expenses, who is considered an eligible dependent, and the maximum annual contribution limits.

Helpful Tip! The IRS does not allow funds to be transferred between the FSA Healthcare and the FSA Dependent Care accounts, so make sure you enroll into the correct account. If you enroll, contributions are committed for the entire plan year and no cancellations will be allowed. Any unused funds at the end of the plan year (June 30th) will be forfeited.

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Launched 3/9/2023