Flexible Spending Accounts (FSA)
Updated in March 2020
Flexible Spending Accounts (FSA)
You may enroll in a Flexible Spending Account (FSA) to pay for out-of-pocket healthcare and dependent care expenses using pre-tax dollars that you contribute to your account(s) by payroll deduction.
Important: you must enroll or re-enroll in the FSA every year.
Health Care FSA
Use an FSA to pay for certain IRS-approved medical, dental, or vision expenses not covered by your insurance. These expenses may be for you and your eligible dependents, and include deductibles, copayments, coinsurance, and non-covered expenses such as eyeglasses and hearing aids.
For a more complete list of eligible healthcare expenses, click.
Your FSA comes with a debit card that you can use to pay eligible expenses. The debit card contains your full annual allocation at the time it is issued to you.
Generally, the maximum amount you may contribute to a health care FSA for 2020 is $2,750.
Rollover and Forfeiture Features
If you have $500 or less remaining in your healthcare FSA at the end of the year, that amount will be rolled over into an FSA for the next year, after April 1.
As you decide about participation in a Berklee health care FSA, please consider if you will have any rolled over amounts from the prior year to avoid over-contributing in the new year.
Health Care FSA Annual Rollover Example
|You contribute $2,550, but $500 is unused and left over at the end of the year.||You contribute $2,600. $500 rollover from 2018. Total amount available for 2019 expenses: $3,100.||You contribute $1,000. $500 rollover from 2019. Total amount available for 2020 expenses: $1,500.|
Health Care FSA Debit Card
You will receive a flexible spending debit card for use with your account. Use your flex debit card to pay for eligible expenses at many doctors' offices, pharmacies, and other health care providers. Be sure to keep receipts for your purchases since IRS regulations may require you to substantiate your expenses. At any time during the plan year, your available flex debit card balance is your total, annual FSA election minus previous purchases (or reimbursements).
In most cases, you may be reimbursed for out-of-pocket health care expenses that you and your family members incur if those expenses are not covered by health or dental insurance. In addition, to be eligible for reimbursement, these expenses cannot be reimbursed by any other source and cannot be deducted on your income tax return. Examples of common, eligible expenses include copayments, deductibles, coinsurance required by health or dental insurance, products and services not covered by health insurance, and over-the-counter drugs such as contact lens fluid, cold medicines, and pain relievers prescribed by your doctor or health care provider. See WageWorks for more examples of common, eligible expenses.
Dependent Day Care FSA
A Dependent Care FSA is used to reimburse day care expenses you or your spouse incurs in order to work or look for work. The day care expenses must be for eligible dependents (typically dependent children younger than 12 years of age). Generally, the maximum amount you may contribute to this account is $5,000 for single individuals or married, filing jointly; or $2,500 if married and filing separately. Lower limits may apply if your spouse contributes to a similar plan at his or her job.
Other, non-FSA tax benefits may be available if you have dependents. Be sure to consult your tax advisor before enrolling in a Dependent Care FSA.
Dependent Care FSA Reimbursement
For dependent care reimbursements, send your request for reimbursement to WageWorks either electronically or on paper. Contact WageWorks at (877-924-3967 or wageworks.com) for instructions on and assistance with submitting your reimbursement request electronically and/or on receiving your reimbursement via direct deposit.
Your dependent is anyone you claim as a dependent on your tax return and who is under age 13 or disabled and incapable of self-care. Examples of dependent care reimbursable expenses include adult day care, day care, summer day camp, day care provided in your home, and before- or after-school care. Generally, you may be reimbursed for expenses you incur for the care of your "dependent" if those expenses occur in order for you or your spouse to go to work or to look for work. Dependent care provided by certain members of your family may not be eligible for reimbursement.
FSA Account Tax Savings
You make your payroll deduction contributions to an FSA pre-tax. This means you do not pay federal income tax, Massachusetts income tax, or Social Security tax on the money you contribute to an FSA. As a result, you save an average of 30 percent on a eligible expenses you pay with your FSA.
FSA Tax Savings: How It Works
|Without an FSA||With an FSA|
|Social Security and Medicare||-$2,295||-$2,142|
|After-Tax (Net) Pay||$25,571||$24,029|
|Eligible Healthcare Expenses Not Covered by Insurance||-$2,000 paid out of pocket||-$2,000 paid from FSA|
|Remaining Spendable Income||$23,571||$24,029|
|Take home this much more net pay with FSA||$0||$458|
* The example above is for illustrative purposes only, and reflects national averages and numerous assumptions. Your results may be different. Every situation varies. Consult your tax advisor for tax advice.
When Contributions Start
When you are first hired, you may start contributing as of the first of the month following your hire date. You must make this election within 30 days of your hire date. Otherwise, you are limited to starting contributions as of January 1. You will make your election during the annual benefits open enrollment period. Exceptions to the limited annual enrollment period may be available if you experience a qualifying life event (login required).
When Contributions Stop
Your pre-tax contributions to your account(s) stop at the end of the plan year (December 31) or when your employment ends, whichever is earlier.
Your election to make pre-tax contributions to your account(s) is irrevocable for the duration of the plan year. Therefore, you may not stop or change the amount of your pre-tax contributions once the plan year has begun. Exceptions to this rule may be available if you experience a qualifying life event. Also, funds deposited to your account may be used only to reimburse you for eligible expenses that you have paid. Funds may not be withdrawn from your account for other reasons, even in the event of financial hardship.
You will be reimbursed only for eligible expenses you incur during the plan year (January 1–December 31). The deadline for requesting reimbursement for a plan year is the March 31 immediately following the plan year (example: March 31, 2020, is the deadline for requesting reimbursement for expenses incurred between January 1, 2019 and December 31, 2019).
When Your Berklee Employment Ends
Once your Berklee employment ends, your pre-tax contributions to your account(s) end. If you have funds remaining in your account(s), you may continue to request reimbursement for expenses incurred from the beginning of the plan year (January 1) through your last day of employment. The deadline for requesting reimbursement for a plan year is March 31 in the year immediately following the plan year.
Health Savings Account (HSA)
If you enroll in the high-deductible PPO plan, you can also enroll in and contribute to a health savings account (HSA). The money that you save in this account is deducted from your pay pre-tax. The funds in this account can roll over and accumulate from year to year if you do not spend them. You may use HSA funds to pay for qualified medical expenses at any time.
If your enrollment in the high-deductible PPO plan ends, you may not continue to deposit funds in your HSA from your Berklee pay. However, the funds you have already deposited in your HSA remain available for your use even if you no longer work for Berklee.
Federal tax law places limits on HSA eligibility. Before enrolling, be sure to consult your tax advisor, and please keep the following in mind:
- You must be enrolled in Berklee’s high-deductible PPO plan in order to enroll in a health savings account at Berklee.
- You need to spend all of your current year's health care flexible spending account (FSA) money by the end of the year in order to contribute to a Berklee HSA for the following year.
- You cannot elect both a health care FSA and an HSA at Berklee.
- If you are enrolled in any portion of Medicare (Part A, Part B, Part C, or Part D), you cannot enroll in an HSA.
- Federal law limits the maximum amount you can contribute to an HSA. See WageWorks for contribution limits for individuals and families.
- Other limits may apply. Consult your tax advisor.