Flexible Spending Account (FSA)
As a part of Murray State University's Tax-Saver Program, you can contribute to Flexible Spending Accounts (FSAs) that let you pay yourself back on a tax-free basis for certain healthcare and dependent day care expenses.
You can contribute a minimum of $50 and a maximum of $5,000 to either a Medical Flexible Spending Tax-Saver Account or Dependent Day Care Flexible Spending Account, or both. Your contributions are paid through payroll deductions with pre-tax dollars. This means the actual impact on your take-home pay is less.
How the Medical Spending Tax-Saver Account Works
- Decide how much you want to contribute to the account.
- Have your contributions deducted from your paycheck each pay period before taxes are withheld. You can contribute a minimum of $50 and a maximum of $2,500.
- Use the money in your account to pay for eligible expenses such as copayments, coinsurance and deductibles.
- The full value of your account is available after the first of the calendar year.
Your Medical Flexible Spending Tax-Saver Account Debit Card
Use the debit card to pay for eligible health care out-of-pocket expenses. The debit card gives you instant, on-the-spot access to your account. When you pay for an item or service, use the card just like a debit card, (except that you don't need to enter a PIN, and you should select "credit" at the register). You can even use it to make eligible purchases online.
You can use your debit card at your doctor's office, the hospital and all medical providers. "Non-medical" merchants (like retail and grocery stores) who have agreed to certain IRS guidelines also accept FSA debit cards. You can only use your card at merchants who have agreed to these guidelines.
Tip: Always save your receipts! IRS proposed regulations requires plans to abide by all of the following correction procedures for any improper payments using the debit card. Until the amount of the improper payment is recovered, the debit card must be de-activated and the employee must request payments or reimbursements of medical expenses from the health FSA through other methods (for example, by submitting receipts or invoices from a merchant or service provider showing the employee incurred a section 213 (d) medical expense). If a card is offered as part of your program, an Automatic Card Suspension feature will apply. This feature automatically suspends Health Care Card privileges whenever a card transaction remains unverified after 90 days and the employee has not taken the required corrective action to verify their expense. This feature helps ensure compliance by requiring all card transactions be verified or paid back to the plan.
How the Dependent Day Care Flexible Spending Account Works
Use the Dependent Day Care Flexible Spending Account to reimburse yourself (while you and your spouse work, or go to school full-time) for day care expenses of:
- A dependent child under age 13 or
- A dependent child or adult who spends at least eight hours per day in your home and is incapable of self care.
Just like the Medical Flexible Spending Tax-Saver Account, you can contribute up to $5,000 each year for a married couple filing a joint return, or for a single parent filing as "Head of Household". For a married couple filing separate returns, the limit is $2,500 each year. You can be reimbursed for up to the amount available in your account at the time of your request.
When filing income tax returns, the day care credit is reduced dollar for dollar, by contributions to or benefits received from an employer's cafeteria plan. An employee may participate in their employer's cafeteria plan and also take a portion of the day care expenses through the credit if they have sufficient expenses in excess of their cafeteria plan annual election, but within the tax credit limits.
Important: You forfeit any dollars left in your dependent care flexible spending account at the end of the plan year (December 31).