An employee can open a Flexible Spending Account (FSA) for work-related, dependent care and/or for medical expenses, which are not reimbursed by insurance. The employee designates how much he or she wants to contribute to a Flexible Spending Account (FSA). That amount is automatically deducted from twenty-four of the employee's twenty-six pay periods and deposited to an account. The amount the employee elects to set aside is not subject to federal income tax or social security tax.
A new employee may elect to participate when enrolling for benefits and will be effective the first of the month following one month of employment or any active employee may elect to participate during open enrollment in July, for an effective date of October 1.
How does the FSA work?
Employees receives a flex convenience card that a member can use to pay for expenses. Receipts must be kept in case they are requested by Prime Pay for verification. The convenience card is set up to allow for the card to be used to pay for certain coded expenses, with a pre-determined limit. This will allow participants the benefit of using the medical spending without having to pay the provider and then file for reimbursement. Instead you will just use the convenience card and the money will be deducted from the amount you elected to set aside at the start of the plan year. If an employee incurs an eligible expense and the flex card is not used, reimbursement may be requested using the Prime Flex app and providing documentation. Direct deposit must be set up to receive reimbursement.
Alachua County's plan year runs from October 1 of each year until September 30 of the following year. A new employee's plan year runs from their effective date of coverage until September 30. Expenses must be incurred during this time-frame in order to be eligible for reimbursement. The employee has until December 31 to file for reimbursement. Flexible spending accounts are governed by Section 125 of the Internal Revenue Code and any funds set aside for a plan year must be used during that plan year.
For the 2020-21 plan year the IRS will allow up to $550 of unused funds in your medical spending account to be carried over to the next plan year. The $550 carry over applies to the medical spending account only.
Employees must designate a new annual spending amount each year at open enrollment if they wish to continue to participate in the flexible spending program. If a new amount is not designated by the employee, the spending account does not continue into the next benefit year.
A qualified life-style change allows the employee to increase or decrease the designated annual amount or to enroll or discontinue.