FSA의 두가지 Types

Most cafeteria plans offer two different flexible spending accounts; one is for qualified medical expenses and the other is for dependent care expenses. A few cafeteria plans offer other types of FSAs, especially if the employer also offers an HSA. Participation in one type of FSA does not affect participation in another type of FSA, but funds cannot be transferred from one FSA to another.

Medical expense FSA

The most common type of FSA is used to pay for medical expenses not paid for by insurance, usually deductibles, copayments, and coinsurance for the employee's health plan. Other items eligible for reimbursement include such over-the-counter (OTC) items such as bandages, rubbing alcohol, first aid kits, and other medical expenses not distinguished as a drug or medicine. Prior to January 1, 2011, OTC medications were also reimbursable under health care FSA plans; however, the Patient Protection and Affordable Care Act changed the rules regarding these OTC expenditures, allowing reimbursement for these items only when purchased with a doctor's prescription, with the exception of insulin. Generally, allowable items are the same as those allowable for the medical tax deduction, as outlined in IRS publication 502.

Prior to the enactment of the Patient Protection and Affordable Care Act, the Internal Revenue Service permitted employers to enact any maximum annual election for their employees. Patient Protection and Affordable Care Act amended Section 125 such that FSAs may not allow employees to choose an annual election in excess of $2,500. Employers have the option to limit their employees' annual elections further. This change starts in tax years that begin after December 31, 2012.

Some employers choose to issue a debit card to their employees who participate in the FSA. Participants may use the debit card to pay for their FSA-eligible expenses at the point of sale. Pharmacies and grocery stores who choose to accept the debit card as payment must disallow transactions at point of sale if the participant attempts to pay for items that are not eligible under an FSA. In addition, employers still must require employees to provide itemized receipts for all expenses charged to the debit card. The IRS allows employers to waive this requirement when an individual uses the debit card at a pharmacy or grocery store that complies with the above procedure. The IRS also allows employers to waive this requirement when the amount charged to the debit card is a multiple of a co-pay of the employee's group health insurance plan. In most cases, the FSA administering firm will prefer actual insurance Explanations of Benefits (EOBs) clearly representing the patient portion of any medical expense, over other, more vague documentation. This requirement is becoming less cumbersome as more insurances allow patients to search for past EOBs on their websites.

Dependent care FSA

FSAs can also be established to pay for certain expenses to care for dependents who live with someone while that person is at work. While this most commonly means child care, for children under the age of 13, it can also be used for children of any age who are physically or mentally incapable of self-care, as well as adult day care for senior citizen dependents who live with the person, such as parents or grandparents. Additionally, the person or persons on whom the dependent care funds are spent must be able to be claimed as a dependent on the employee's federal tax return. The funds cannot be used for summer camps (other than "day camps") or for long term care for parents who live elsewhere (such as in a nursing home).

The dependent care FSA is federally capped at $5,000 per year, per household. Married spouses can each elect an FSA, but their total combined elections cannot exceed $5,000. At tax time, all withdrawals in excess of $5,000 are taxed.

Unlike medical FSAs, dependent care FSAs are not "pre-funded"; employees cannot receive reimbursement for the full amount of the annual contribution on day one. Employees can only be reimbursed up to the amount they have had deducted during that plan year.

If married, both spouses must earn income for the Dependent Care FSA to work. The only exception is if the non-earning spouse is disabled or a full-time student. If one spouse earns less than $5,000 then the benefit is limited to whatever that spouse earned. Many plan coordinators do not warn of this limit. This limitation can create a situation where the earning spouse sets up a Dependent Care FSA and dutifully sends in receipts to withdraw funds and then at tax time the FSA is effectively eliminated and all the work wasted. See IRS Form 2441 Part III for details.

 

앞에서 언급하였듯이 Dependent care의 경우 $5000까지 allow해도 employee와 employer모두 손실없이 혜택을 볼 수 있습니다.

그러나 Medical Expense는 $2500까지 가능하나, 중간의 사직한 경우를 고려하여 적절하게 조정하는것이 좋겠습니다.