Flexible Spending Accounts enable you to pay for out-of-pocket health care or dependent daycare expenses with pre-tax payroll contributions. FSAs are exempt from federal taxes, Social Security (FICA) taxes and, in most cases, state income taxes. Your tax savings and the effect on your paycheck will depend on your personal situation (e.g., your household income, tax bracket, and the amount you contribute to the account).
Keep in mind, if you enroll in the $2,500 or $5,000 Deductible PPO Options, you cannot contribute to the SMU Healthcare FSA. Also, the Internal Revenue Service has a "use-it-or-lose-it" rule for FSA accounts, which means you must use your contributions for expenses incurred during the year you make them.
IMPORTANT: If you enroll in the Health Care or Dependent Care FSA, you will receive a Discovery Benefits Debit Card, which can be used to pay for most eligible FSA expenses. It is very important that you register for immediate access to your personal account(s) on the Discovery Benefits website. Once registered, you will have access to your account balance, the status of expenses paid with your Debit Card, and expenses you have submitted for reimbursement via the Reimbursement Request Form.
You will receive one Debit Card. If you need additional cards for a spouse or an enrolled child (age 18 or older), you must submit a request to Discovery Benefits.You will see references to fees for additional cards. As an SMU employee, you will not be charged for additional cards.
Health Care Flexible Spending Account
The Health Care FSA allows you to set aside pre-tax dollars to pay for eligible health care expenses incurred by you, your spouse, and your eligible dependents. Expenses for your domestic partner or his or her children will be eligible for reimbursement under your Health Care FSA if they qualify as your dependents for federal income tax purposes.
Refer to Health Care FSA Eligible Expenses for additional information.
The maximum annual contribution to the Health Care FSA is $2,500 (if you and your spouse are both SMU employees, your total contributions cannot exceed this amount). Be sure to visit the Discovery Benefits website for important information on eligible expenses and how and when to use your Discovery Benefits Debit Card.
Dependent Care Flexible Spending Account
The Dependent Care Flexible Spending Account enables you to pay for out-of-pocket, work-related dependent day-care costs with pre-tax dollars. If you are married, you can use the account if you and your spouse both work or, in some situations, if your spouse goes to school full-time. Single employees can also use the account.
An eligible dependent is someone for whom you can claim expenses on Federal Income Tax Form 2441 "Credit for Child and Dependent Care Expenses." Children must be under age 13. Other dependents must be physically or mentally unable to care for themselves. Dependent Care arrangements which qualify include:
(a) A Dependent (Day) Care Center, provided that if care is provided by the facility for more than six individuals, the facility complies with applicable state and local laws;
(b) An Educational Institution for pre-school children. For older children, only expenses for non-school care are eligible; and
(c) An "Individual" who provides care inside or outside your home. The "Individual" may not be a child of yours under age 19 or anyone you claim as a dependent for Federal tax purposes.
You should make sure that the dependent care expenses for which you are currently paying qualify under our Plan. You will be provided with a debit card to pay for dependent care expenses.
The law places limits on the amount of money that can be paid to you in a calendar year from your Dependent Care Flexible Spending Account. Generally, your reimbursements may not exceed the lesser of:
(a) $5,000 (if you are married filing a joint return or you are head of a household) or $2,500 (if you are married filing separate returns);
(b) your taxable compensation;
(c) your spouse's actual or deemed earned income (a spouse who is a full time student or incapable of caring for himself/herself has a monthly earned income of $250 for one dependent or $500 for two or more dependents).
In order to have the reimbursements made to you from this account be excludable from your income, you must provide a statement from the service provider including the name, address, and in most cases, the taxpayer identification number of the service provider on your tax form for the year, as well as the amount of such expense as proof that the expense has been incurred. In addition, Federal tax laws permit a tax credit for certain dependent care expenses you may be paying for even if you are not a Participant in this Plan. You may save more money if you take advantage of this tax credit rather than using the Dependent Care Flexible Spending Account under our Plan. Ask your tax adviser which is better for you.