Flexible Spending Accounts
Premium Pre-Tax Plan
All core benefit premiums, except dependent life insurance are deducted from an employee's gross income before taxes are calculated. The amount paid for benefits is free from federal income tax and social security tax, thus increasing an employee's take home pay. Section 125 of the Internal Revenue Code governs premium pre-tax plans, and as a result, changes to benefit elections can only be made at the time of employment, during open enrollment or as a result of a qualified life-style event. All employees are automatically enrolled in this plan.
Flexible Spending Accounts
Alachua County offers Flexible Spending Account (FSA) for work-related, dependent care and/or 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 29 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 2023-24 plan year the IRS will allow up to $610 of unused funds in your medical spending account to be carried over to the next plan year. The 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 event allows the employee to increase or decrease the designated annual amount or to enroll or discontinue.
Medical Spending Account
The medical spending account is used for medical expenses for you and your dependents that are medically necessary, and not covered by the group health insurance. The maximum amount to be set aside for the medical spending account this fiscal year (2023-24) is $3,050 and the minimum is $240. The medical spending account functions like a line of credit, the entire amount is available at the beginning of the plan year and an employee may file for reimbursement of eligible expenses as soon as the plan year begins. The plan year is October 1 to September 30, expenses must be incurred during this time each year in order to be eligible for reimbursement. A new employee's plan year runs from his/her effective date of coverage until September 30.
Alachua County is required to provide COBRA notification to a participating employee of his or her rights to continue participation in the Medical Spending Account for the remainder of the plan year.
Some examples of eligible expenses include:
- Doctor co-payments
- Eye exams, eyeglasses, contact lenses and supplies
- Hearing aids
- Prescription drug co-payments,
- Dental work
- Orthodontic work
- Deductibles and coinsurance
Cosmetic medical procedures are generally not covered. An employee may refer to the Plan Description for more information. You may also refer to IRS Publication 502, "Medical and Dental Expenses" for additional information. This publication is available at the local Internal Revenue Service office or online at the IRS website.
Dependent Care Account
A dependent care reimbursement account helps pay for child care expenses so that an employee may work. The dependent care account functions like a checking account, you can only claim reimbursement for up to the amount that is deposited in your account. The maximum amount able to be set aside each year is $5,000 and the minimum is $240.
Before enrolling in the Flexible Spending Account for dependent care, an employee needs to compare the income tax credits that are available. An employee will generally reduce the amount of taxes paid by enrolling in the Alachua County dependent care reimbursement plan if;
- The enrollee files on income tax form 1040 EZ
- The enrollee and spouse file taxes as "married, filing separately."
Qualifying Dependents for Purpose of a Dependent Care Account
A qualifying dependent is any person who lives in the employee's home and for whom the employee must provide care while the employee is working. Qualifying dependents may be, but are not limited to:
- child under 13 years of age
- a disabled person
If the employee is divorced or legally separated and the dependent lives with the employee, the employee is entitled to claim work-related child care expenses. This is true even if the employee is not claiming the dependent as an exemption on his or her tax return.
Qualified expenses are expenses for the care of qualifying dependents so the participant and or the spouse can work, look for work, or attend school. The expenses include those paid to:
- a licensed day care center
- after school or summer programs
- an individual who provides care in his or her home
- a licensed practical nurse or assisted-care facility for an adult
An employee may refer to the Summary Plan Description for more information. You may also refer to IRS Publication 503, "Child and Dependent Care Expenses" for additional information. This publication is available at the local Internal Revenue Service office or online at www.irs.gov