Flexible Spending Accounts (FSAs)
Flexible Spending Accounts (FSAs), administered by Discovery Benefits, allow you to set aside pre-tax dollars to pay for eligible health and dependent care expenses. Each year, you must elect the annual amount you want to contribute to each account. Your contributions will be deducted pre-tax from your paycheck which helps reduce your taxable income. The State of Colorado offers three FSA options.
General Purpose Healthcare FSA – IRS Maximum $2,750/year
The General Purpose Healthcare FSA will reimburse you for eligible health care expenses incurred by you, your spouse, and your children during the plan year. Eligible expenses include copays, coinsurance, deductibles, orthodontia, glasses, and more.
The entire annual amount you elect can be used at any time. When you incur an eligible expense, you can use your Discovery Benefits debit card or pay out-of-pocket and submit a reimbursement request.
Note: If you are enrolled in the HSA option, you are not eligible to participate in the General Purpose Healthcare FSA.
Limited Purpose Healthcare FSA – IRS Maximum $2,750/year
HSA enrolled participants are eligible to participate in the Limited Health Care FSA to set aside pre-tax dollars for eligible dental and vision expenses only.
Dependent Care FSA – IRS Maximum $5,000/year
The Dependent Care FSA lets you use pre-tax dollars to pay daycare expenses for children age 12 and under, or elder dependents who are unable to care for themselves. The care must be necessary for you and your spouse to remain employed. Eligible expenses include live-in care, licensed daycare centers, preschool, and day camps. Unlike the Health Care FSA, you can be reimbursed only up to the amount available in your account after your payroll contributions.
Rules to Keep in Mind
FSAs offer significant tax advantages, but are subject to IRS regulations:
• All expenses for the Health Care and Dependent Care FSAs must be incurred during the plan year: July 1 through June 30.
• Submit all claims for reimbursement by October 15, 2021.
• All Dependent Care FSA funds must be used by the end of the plan year or they will be forfeited. For the General and Limited Purpose Health Care FSAs, you may roll over up to $500 of unused healthcare funds. Any remaining funds above this amount will be forfeited.
• Once you enroll in the FSA, you can only change your contribution amount if you experience a qualified status change.
• Each account functions separately. You cannot transfer funds from one FSA to another.