Frequently Asked Questions About Flexible Spending Plans

Questions

Will I have to pay taxes on the money I use in the Health and/or Dependent Care Flexible Spending Accounts?

How much will I really save?

How much should I contribute?

Wouldn’t I save more by taking a deduction on my income tax?

Do I have enough out-of-pocket expenses to make a Health Care Flexible Spending Account worthwhile?

Can I request reimbursement from my Flexible Spending Account for services I receive before the plan year begins if I am not billed until after the plan year starts?

What is an “Eligible Expense” under the Health Care Flexible Spending Account?

Can I change my election or stop contributing money to my Flexible Spending Account at any time during the plan year?

How do I submit my Flexible Spending Account expenses?

What happens if I submit a claim for an amount greater than my Health or Dependent Care Flexible Spending Account balance?

What if I do not use all of the money that I deposit into my Flexible Spending Account by the end of the plan year?

Can I use the Dependent Care Flexible Spending Account for elder care?

If I have someone come into my home to take care of my children instead of using a day care facility, do these expenses qualify for a Dependent Care Flexible Spending Account?

If I underestimate my Dependent Care Flexible Spending Account contributions, can I use money from my Health Care Flexible Spending Account to make up the difference?

Is there a resource where I can obtain my Flexible Spending Account information at any time?

Are the following covered under the Health Flexible Spending Account?
  • General Dental Care
  • Cleaning
  • Preventative Check-ups
  • Fillings
  • Crown Work


Do you cover feminine health products such as tampons/pads?

My husband is employed and I stay at home with our daughters. My youngest attends preschool twice a week. I can not use preschool expenses as a deduction on my taxes. Does the preschool expense qualify under the Dependent Flexible Spending Account?

I have medical bills that I am paying on a payment plan to a couple of hospitals for past medical expenses. Can I pay those monthly payments from my Flex Account?

I have a son with orthodontia work which he started in 2003, can I set up a reimbursement if I’m billed in 2004 for 2003 expenses?

What is IIAS? Do I have to keep receipts?

What is the 90% rule? Why do I have to keep receipts?

Why does my Benny card work at some pharmacies and not at others?

Who is an eligible dependent for the Healthcare Flexible Spending Account?

How do I refund my account for an overpayment, insurance refund or ineligible expense?

Answers

Will I have to pay taxes on the money I use in the Health and/or Dependent Care Flexible Spending Accounts?
No, never! Contributions used for Flexible Spending Accounts are taken out of your salary before Federal Income Taxes, Social Security Taxes and most state and local taxes are applied.
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How much will I really save?
Depending upon your individual tax bracket and residency, you could save as much as 20 percent to 50 percent on eligible services by using a Health and/or Dependent Care Flexible Spending Account
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How much should I contribute?
How much you contribute depends on your individual situation. Consider last year’s medical and/or dependent care expenses, any medical/dental/vision care costs you foresee that will not be covered under your medical/dental/vision` plans, and any changes in your family status that might have an impact on these expenses. You may want to estimate conservatively the first year. Keep in mind that if you overestimate, the amount you forfeit may be offset by your total tax savings.
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Wouldn’t I save more by taking a deduction on my income tax?
You need to determine whether taking tax deductions is more beneficial than using Health and/or Dependent Care Flexible Spending Accounts. According to the IRS, only medical and /or dental expenses that exceed 7.5 percent of your adjusted gross income can be deducted from your income taxes.

For work-related Dependent Care expenses, the tax credit amount is determined by applying a percentage to your total Dependent Care expenses. According to the current tax structure, generally the tax credit is more beneficial than a Dependent Care Flexible Spending Account if your annual family income is under $26,000. You need to determine which is better for you.
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Do I have enough out-of-pocket expenses to make a Health Care Flexible Spending Account worthwhile?
Some examples of common out-of-pocket expenses covered by a Health Care Flexible Spending Account include: copays/deductibles, eye exams/Lasik surgery, eyeglasses, contact lenses, saline solution, chiropractic treatment, orthodontia and dental work. A Health Care Flexible Spending Account can be a valuable way to fund these expenses on a tax-free basis.
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Can I request reimbursement from my Flexible Spending Account for services I receive before the plan year begins if I am not billed until after the plan year starts?
No. According to IRS guidelines, a qualified expense is “incurred” at the time the service is provided, not when you are billed (or charged) or actually pay for this service. Therefore, reimbursements made during a plan year are only made for eligible expenses incurred and paid for during that same plan year.
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What is an “Eligible Expense” under the Health Care Flexible Spending Account?
An “eligible expense” is defined as an item for which you could have claimed a medical expense deduction on an itemized Federal Income Tax return for which you have not been reimbursed from insurance or any other source. Insurance premiums are not considered eligible medical expenses.
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Can I change my election or stop contributing money to my Flexible Spending Account at any time during the plan year?
Federal regulations state that once you have enrolled, you cannot change your election unless you have a qualified family status change such as a birth, death, marriage, divorce, or change in spouse’s employment.
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How do I submit my Flexible Spending Account expenses?
Use our Health Care and Dependent Care claim forms for manual submissions or use your “Smartflex Card”. Our card system will interface with our Flexible Spending Account system and automatically process your medical/dental, pharmacy copays and associated out-of-pocket expenses when you swipe or use your card at participating merchants and health care providers.
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What happens if I submit a claim for an amount greater than my Health or Dependent Care Flexible Spending Account balance?
When you submit a claim for your Health Care Flexible Spending Account, you will be reimbursed up to the full amount of your annual election, regardless of the amount of money that has been deposited into your Account. Contributions will continue throughout the year and claims will continue to be paid until your annual maximum is met.
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Dependent Care claims are paid a little differently. If you submit a claim and your balance is less than the amount of the claim, you will only be reimbursed for the amount of money available in your Account. The remainder will be reimbursed once money is deposited into your Dependent Care Flexible Spending Account. This enables you to submit a claim only once and receive funding on an ongoing basis, rather than be denied payment or be forced to resubmit the claim until it can be paid in full.
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What if I do not use all of the money that I deposit into my Flexible Spending Account by the end of the plan year?
What happens If you have not used all the money in your Flexible Spending Account by the end of the plan year depends on what option your employer has set up for your group.

You may have the "grace period" option which allows 75 more days in the new plan year for you to spend your remaining balance.

If your employer has set up the "rollover option" you are allowed to roll up to $500 of your remaining balance into the new plan year.

Not all FSA plans have a grace period or rollover option, so please check your FSA enrollment materials or call our office at 877-727-3539 to confirm how this will work for your FSA account.
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Can I use the Dependent Care Flexible Spending Account for elder care?
Yes. You can use the Dependent Care Flexible Spending Account for day care expenses so that you (or if you are married, you and your spouse) can work if:
  • You are responsible for at least 50 percent of the support of an elderly parent or any person living with you who is physically or mentally incapable of self-care; and this person is your legal dependent; or
  • The elder care is needed because you work and your spouse is a full-time student.
    
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If I have someone come into my home to take care of my children instead of using a day care facility, do these expenses qualify for a Dependent Care Flexible Spending Account?
Yes. You can include wages paid to a baby-sitter or companion in or outside your home if the services are necessary in order for you (or, if you are married, you and your spouse) to work. Expenses will also qualify for a Dependent Care Flexible Spending Account if you work and your spouse is a full-time student. You must make payments for child and dependent care to someone you (or your spouse) cannot claim as a dependent. It is also required that the care provider be identified on your tax return.
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If I underestimate my Dependent Care Flexible Spending Account contributions, can I use money from my Health Care Flexible Spending Account to make up the difference?
No. The Health and Dependent Care Flexible Spending Accounts are two separate benefits plans. You cannot transfer money between accounts.
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Is there a resource where I can obtain my Flexible Spending Account information at any time?
Yes, you will have access to Stanley Benefit Services "MyFlex" website. Stanley’s member and consumer self-service website is available 24 hours a day 7 days a week wherever you have Internet access. You will be able to view payment information, etc. at Select Account Logins and click on "MyFlex". Your Social Security number is your User ID and your PIN is mailed to you at the beginning of your plan year. If you do not know your PIN or need any information, contact us at 1-877-SBS-Flex.
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Are the following covered under the Health Flexible Spending Account?
  • General Dental Care
  • Cleaning
  • Preventative Check-ups
  • Fillings
  • Crown Work

Yes, all of the above-listed items are eligible for the Health Flexible Spending Account, as long as they are not reimbursed by any insurance plan.
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Do you cover feminine health products such as tampons/pads?
No. Feminine products such as these are not eligible.
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My husband is employed and I stay at home with our daughters. My youngest attends preschool twice a week. I can not use preschool expenses as a deduction on my taxes. Does the preschool expense qualify under the Dependent Flexible Spending Account?
Both spouses must work, attend school, or be actively looking for work in order for Dependent Care expenses to be eligible under the Flexible Spending Account.
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I have medical bills that I am paying on a payment plan to a couple of hospitals for past medical expenses. Can I pay those monthly payments from my Flex Account?
No. The only exception to this is the orthopedic allowance where you have ongoing services performed. Past medical bills are not allowed.
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I have a son with orthodontia work which he started in 2003, can I set up a reimbursement if I’m billed in 2004 for 2003 expenses?
You would only want to put aside the orthodontia expenses for 2004. For example, if you make a monthly payment of $100, you would only want to put in $1200 for the 2004 orthodontia. Top


What is IIAS? Do I have to keep receipts?
IIAS stands for Inventory Information Approval System. It is technology that allows the Benny card to pay for eligible items only. If you purchase other items at the same time, the clerk will ask for the balance to be paid with an alternate form of payment (cash, check or other credit card). The IRS requires this technology for all chain stores, department stores, big box stores and most pharmacies. You are not required to send in receipts for purchases at an IIAS location, but we recommend you keep receipts as a general rule.Top


What is the 90% rule? Why do I have to keep receipts?
If a pharmacy chooses not to implement the IIAS technology, an alternate solution is for the pharmacy to be exempted by the 90% rule. That means that the pharmacy has been certified such that 90% of its gross revenue is derived from flex-eligible items. At these pharmacies, your Benny card will work, but in certain circumstances you will be required to send in your receipt to verify that the purchase is flex eligible. You are advised to keep all your receipts for flex purchases at these locations.Top


Why does my Benny card work at some pharmacies and not at others?
Effective 7-1-09, the IRS required all pharmacies to either implement the IIAS technology or become exempt using the 90% rule. If a pharmacy did neither of these, no Flex card will work there. Reimbursements for eligible items may be requested using a manual Reimbursement Request Form (see list of forms under “Info/Forms”).

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