Open Enrollment is the time for employees to enroll or re-enroll in an FSA if you want to continue the plan in 2017. To participate, you must contribute a minimum of $180 per year. An FSA allows you to pay for eligible expenses on a pretax basis. As a result, your salary is reduced before taxes are assessed, and you pay less in taxes.
Plan changes — if you do not re-enroll
Beginning with the 2017 plan year, you must have at least $25 remaining in your Health FSA after the run-out period (April 15 of the next plan year) to be able to carry over funds to the next plan year. Funds under $25 are forfeited. You may only carry over funds (up to $500) for one year.
The Health FSA allows you to pay for eligible medical expenses for you and your eligible family members. You may contribute a maximum of $2,550. If both you and your spouse are UC employees, you may each contribute up to $2,550.
As a reminder, the Health FSA lets you carry over up to $500 of unused funds to the next plan year. With the carryover, if your balance is less than $500, you do not have to rush to spend all of your Health FSA funds or worry about losing money when the 2017 plan year ends.
You have until Dec. 31, 2016 to incur eligible expenses for the 2016 plan year. The plan’s deadline to file claims for expenses incurred during the 2016 plan year is April 15, 2017. After the April 15 deadline, unused funds up to $500 will carry over to the 2017 plan year and be available for reimbursement in early May. Unused funds greater than $500 will be forfeited.
The carryover amount does not count against your Health FSA election for the following plan year. You may still elect the maximum of $2,500 per plan year.
Dependent Care FSA
The DepCare FSA allows you to pay for eligible expenses for care of your child (up to age 13) or eligible adult dependent. You may contribute a maximum of $5,000. If you're married and filing separate tax returns, you may each contribute $2,500.
IRS rules do not allow a DepCare FSA to have a carryover feature, but you can incur eligible expenses for reimbursement during the grace period. You have until March 15, 2017 to use your 2016 plan year funds. All claims for the 2016 plan year must be filed by April 15, 2017.
Re-enrolling in 2017
Reviewing your FSA account information can help you plan for re-enrolling in 2017. You must re-enroll during Open Enrollment if you wish to participate. To avoid forfeiting money through the IRS “use-it-or-lose-it rule,” be sure to carefully estimate your planned expenses and make a conservative election based on that estimate.
Advantages of a Health or Dependent Care FSA
- A planned approach to paying expenses — You set aside money that you will have to pay anyway in a pre-tax account from which you can draw to pay eligible expenses.
- Affordable pre-tax contributions — You contribute an equal portion of the total annual amount of your account by pre-tax deductions each pay period.
- Tax savings — Because your deductions are taken before taxes, your tax liability is reduced.
- Health FSA Benefit card convenience — You will have a card that you can use for qualified expenses at participating providers’ offices, drug stores and most pharmacies where credit cards are accepted, so you won’t have to pay out-of-pocket or file reimbursement claim forms. (Be sure to always save your receipts in the event of future requests by the FSA vendor or the IRS to verify that the purchase is valid.)
Health FSA only
If you enroll in the UC Health Savings Plan, you cannot enroll in the Health FSA. You must have a zero balance in your Health FSA on Dec. 31, 2016.