MCPS flexible spending accounts (FSAs) allow you to set aside a specified dollar amount from your gross pay—“pretax”— to pay for qualifying out-of-pocket medical and dependent care expenses. This amount reduces gross pay and is sheltered from taxes.
You can choose to open a medical FSA, a dependent care FSA, or both. You then indicate the amount to be set aside from your gross pay and deposited into your FSA(s). After paying for qualified expenses, submit a claim reimbursement form to the FSA plan administrator, Benefit Strategies, a third-party vendor. Contact Benefit Strategies by telephone at 1-888-401-3539 or via their website.
Curious how an FSA can help you save money? Here are two examples*:
Orthodontics: Anthony’s daughter needs braces next year. The orthodontist says the braces will cost $5,500. Anthony sends the treatment plan to CareFirst and is informed that the company will pay a total benefit of $1,000. Anthony schedules the procedure for the next calendar year and plans his medical spending FSA for the next calendar year, since the Internal Revenue Service (IRS) requires FSA accounting on a calendar-year basis. Anthony decides to contribute the maximum of $2,550 to his medical FSA and receives a $100 contribution from MCPS. The total tax savings is $781.58, as you can see in Chart 1.
| Amount Sheltered from Taxes | Tax Rates | Tax Savings | |
| $2,550 | X | Federal Tax Rate of 15% | $382.50 |
| X | State and Local Tax Rate of 8% | $204.00 | |
| X | FICA Rate of 7.65% | $195.08 | |
| Total Savings | $781.58 |
Child care: Angela and Felix both work full time and pay $200 per week for daycare for their 2-year-old daughter. Allowing two weeks for vacation, they expect to pay $10,000 (50 weeks @ $200 per week) for daycare in 2017. Angela and Felix use this figure to compare their potential tax savings from an FSA to the income tax credit available for dependent care. They determine that the tax savings from an FSA would be greater than the dependent care tax credit available at their level of income, and then decide to make an FSA election each year until their daughter reaches age 13. By placing $5,000 in a dependent care FSA each year, they expect to realize a total tax savings of $1,532.50 per year, as shown in Chart 2.
| Amount Sheltered from Taxes | Tax Rates | Tax Savings | |
| $5,000 | X | Federal Tax Rate of 15% | $ 750.00 |
| X | State and Local Tax Rate of 8% | $ 400.00 | |
| X | FICA Rate of 7.65% | $ 382.50 | |
| Total Savings | $1,532.50 |
Free Money!
As an incentive to encourage more employees to realize the savings of a medical flexible spending account (FSA), MCPS will deposit an additional $100 to your medical FSA when you contribute at least $100.
Helpful FSA Tips
- “Use It or Lose It”
If you have an FSA for 2016, you should review your account on the Benefit Strategies website and make plans to use any remaining balances before March 15, 2017.Qualifying expenses from your medical or dependent care flexible spending accounts incurred between January 1, 2016, and March 15, 2017, may be reimbursed from your 2016 plan election. Any unspent 2016 balances will be forfeited under the “use it or lose it” rule after March 15, 2017. All 2016 plan-year FSA claims must be submitted by April 30, 2017.
- Keep Your Receipts
You must keep receipts to substantiate all claims made with your FSA debit card or paper submissions. You may be required to submit documentation upon request. All expenditures are subject to audit, per IRS regulations.
- Flexible Spending Debit Cards
When you enroll in a medical FSA, you will receive a Visa debit card, good for making eligible medical purchases such as copayments at your doctor’s office. Your medical FSA debit card is valid for three years. If you currently participate in an FSA and have misplaced your debit card, please contact Benefit Strategies for a replacement. Benefit Strategies charges a $5.00 fee to replace a missing debit card.
Need more information?
For more information about FSAs, please visit our website. There you will find links to claims forms, a list of eligible expenses, an informative booklet: Flexible Spending Accounts: Save Money on Healthcare and Dependent Care!, and a video about FSAs.
In addition, the plan administrator, Benefit Strategies, offers web links to information that can help you decide whether an FSA is right for you. From the Benefit Strategies web page, click on any of the links on the left side of the page. This will provide you with information on FSAs, including videos that explain how FSAs work.
*Based on federal tax savings at 15%; state and local tax savings at 8%; and FICA tax savings at 7.65%.
