Verdugo Hills Flexible Spending Accounts
Made possible by Section 125 of the Internal Revenue Code and subject to IRS regulations, and offered to USC Verdugo Hills employees through HealthComp, FSAs can protect up to $7750 a year per employee from any federal, state, or Social Security tax.
How FSAs work
- You choose an amount – up to $2750 a year ($100 minimum) for health care expenses and/or up to $5000 a year per household in dependent care expenses.
- Calculate expenses carefully – you can only carry over $500 from your health care account to the next year. Any unused amount above $500 in your health care account, or any amount remaining in your dependent care account, will be forfeited.
- The amount you select is then deducted from your paycheck in equal increments over the full 12-month calendar year (except for faculty who opt to receive their base pay over a shorter cycle)
- Enrollment is via Workday; enroll for your FSA within 30 days of hire date, and every year thereafter during open enrollment (you must re-enroll each year), or when you have a life event status change
- If you begin an account mid-year due to enrollment as a new hire or a status change, eligible claims must be for services rendered after the effective enrollment date
- Because the amount you set aside in your FSA is not taxed for Social Security purposes, your future benefit from Social Security may be reduced slightly
Health care FSAs
Health care expenses must be incurred on your behalf, for your spouse, or for an eligible dependent as defined by the IRS:
- Medical and dental plan deductibles
- Some over-the-counter medicines if prescribed
- Other health care expenses not covered by your insurance (most expenses that the IRS considers tax deductible are eligible, but not all)
- Medical and dental insurance premiums
- Expenses associated with cosmetic surgery
- Expenses incurred for ineligible dependents or others not in your family
The full amount you have selected is available for qualifying expenses from January 1-December 31 of the year in question (but you have until March 31 of the following year to submit the previous year’s claims). Up to $500 of your health care FSA can be carried over to the following year but you can’t use it until April 15 (meaning that you could have up to $3200 in your health care account on or after April 15).
Although you can access all funds at the beginning of the year, if you leave USC employment any services provided after your termination date will not qualify, even if you have funds remaining in your FSA (unless you elect COBRA continuation coverage on an after-tax basis – for more information see Leaving USC.
When submitting physical claims, you must complete a claim form (available at www.healthcomp.com) and attach the appropriate receipts and information. The receipt must include the name of the individual for whom the expense was incurred, the provider’s name, date of service, description of service and amount. Canceled checks and credit card slips cannot be used in place of receipts. Any submitted claim that is less than $20 will be processed and pended until the $20 minimum is met.
You may elect direct deposit for your health care FSA, allowing reimbursements to be deposited directly into your checking account. You may also select the Flex Payment Card feature at the time of enrollment, which will allow you to simply swipe your Flex Payment card for qualified purchases (like using a credit card). When you use your card for qualified purchases, the money is instantly deducted from your flex benefit account. If your provider does not accept the Flex Payment Card, you may pay your provider directly, and then submit a receipt with a claim form for reimbursement.
Dependent care FSAs
- You choose an amount - up to $5000 a year per household - for dependent care expenses.
- Calculate expenses carefully - any unused amount remaining in your dependent care account at the end of the calendar year will be forfeited.
- The amount you select is then deducted from your paycheck in equal increments over the full 12-month calendar year (except for faculty who opt to receive their base pay over a shorter cycle).
- Enrollment is via Workday; enroll for your FSA within 30 days of hire date, and every year thereafter during open enrollment (you must re-enroll each year), or when you have a life event status change.
- If you begin an account mid-year due to enrollment as a new hire or a status change, eligible claims must be for services rendered after the effective enrollment date.
- Because the amount you set aside in your FSA is not taxed for Social Security purposes, your future benefit from Social Security may be reduced slightly.
- Eligible dependents include children under age 13, and any dependents (child, spouse, parent, grandparent, brother, sister, etc.) unable to care for themselves because of a disability who spend at least 8 hours a day in your home
- If you are married, both spouses must work in order to qualify, and the amount set aside cannot exceed your earned income or your spouse's earned income, whichever is less.
- You also qualify if your spouse is a full-time student, or physically or mentally disabled - under these circumstances, you generally may set aside up to $200 a month for one dependent and up to $400 a month for two or more dependents.
Please note: Each year FSA plans must pass a non-discrimination test to show they do not favor highly compensated employees regarding eligibility, contributions and benefits. If USC's plans do not pass the test, USC may reduce your election(s) during the year if you are a highly compensated employee as defined by the Internal Revenue Code. Benefits will notify you if it becomes necessary to reduce your contributions.
- Before/after school care
- Educational programs
- Sleepover camps
To receive reimbursement from your dependent care FSA, you must file a claim form stating the provider’s name, address, and taxpayer identification number. You will be reimbursed for the amount of your claim, provided the balance of your account is equal to or more than the amount of your claim and the services have already been provided. If you don’t have enough in your account to cover the expense, you’ll receive the additional reimbursement when enough money has been deducted from your paycheck. Be aware that your W2 tax form will reflect the amount set aside in your dependent care FSA. Also, the money you set aside in a dependent care FSA will reduce - dollar for dollar - the maximum amount of expense you can apply toward the federal dependent care credit on your income tax return. Consult your tax advisor.
For faster reimbursement of eligible dependent care expenses, sign up for direct deposit through HealthComp.
Dependent care services must be rendered by December 31 of the calendar year in order to qualify - there is no grace period as with the health care FSAs. If you leave USC employment, expenses incurred in the previous year can be submitted following your termination date.
Questions about your FSA?
If you have any questions about your Flexible Spending Account, please contact HealthComp Administrators and ask for the Flexible Benefits Department. For online services, go to www.healthcomp.com and click on Service Center and go to Flexible Benefits to view your account.
HealthComp | www.healthcomp.com