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Skip NavigationTop Ten Questions -- UPDATED July 2004
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Dependent Care FSA (DCFSA)
Effective Date
Eligible Expenses
Eligibility To Enroll
Enrollment & Disenrollment
Filing Claims For Reimbursement
Financial Facts
Health Care FSA (HCFSA)
Leave Without Pay (LWOP), Retirement or Separation From Service
New Employees
Open Season
Paperless Reimbursement

Have a question that does not appear here? Ask FSAFEDS directly by clicking here, or call a FSAFEDS Benefits Counselor at 1-877-FSAFEDS (372-3337) Monday through Friday between the hours of 9 A.M. and 9 P.M. Eastern Time. TTY Line 1-800-952-0450.



Top Ten Questions (Updated July 2004)

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General

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Changing Your Election

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Dependent Care FSAs (DCFSA)

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Effective Date

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Eligible Expenses

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Eligibility To Enroll

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Enrollment & Disenrollment

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Filing Claims For Reimbursement

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Financial Facts

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Health Care FSAs (HCFSA)

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Leave Without Pay (LWOP), Retirement or Separation from Service

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New Employees

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Open Season

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Paperless Reimbursement

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Top Ten Questions (Updated July 2004)  |  Print Top Ten Questions
What types of expenses are eligible for reimbursement?
FSAFEDS follows IRS guidelines for what types of expenses may be reimbursed under a Health Care Flexible Spending Account (HCFSA) Expenses and a Dependent Care Flexible Spending Account (DCFSA).

Eligible HCFSA Expenses:



For a more detailed listing of eligible expenses, see our Eligible Expenses Listing.

For a listing of eligible medical expenses please see United States Code 26 Section 213(d) or IRS Publication 502. Note: While insurance premiums are included in Publication 502, they are NOT reimbursable expenses for FSA purposes. Insurance premiums, including those for Long-Term Care and Temporary Continuation of Coverage, are not eligible for reimbursement.

Eligible DCFSA Expenses:

  • amounts paid for services--rendered in or outside of your home--for the care of a qualified dependent necessary to allow you and your spouse to work, look for work, or attend school full-time
  • limited to amounts paid for services rendered in your home or amounts paid for services rendered outside of your home for the care of a qualified dependent. The services rendered must be necessary to allow you and your spouse to work, look for work, or attend school full-time
  • limited to the amount in your DCFSA at the time a claim is reimbursed
  • not covered, paid, reimbursed, or reimbursable from any other source

What kind of over-the-counter (OTC) medicines or products are eligible for reimbursement through my HCFSA?
The IRS has concluded that non-prescription antacids, allergy medicines, pain relievers, cold medicines and other medicines or products purchased to alleviate or treat the personal injuries or sickness of you and/or your dependents are eligible items for reimbursement through a HCFSA. Vitamins and other dietary supplements that are merely beneficial to you and/or your dependent remain ineligible for reimbursement. We have developed a Quick Reference Guide to help you know what kinds of expenses may be reimbursed. If you have questions about the eligibility of a certain item(s), call an FSAFEDS Benefit Counselor at 1-877-FSAFEDS (372-3337) Monday through Friday between the hours of 9 A.M. and 9 P.M. Eastern Time. Keep in mind that when submitting a claim for OTC medicines and products, a detailed receipt naming the product will be required.

What is Paperless Reimbursement?
FSAFEDS has partnered with a number of FEHB plans to implement Paperless Reimbursement. To view which plans are currently participating, click on the Paperless Reimbursement Quick Reference Guide. This new program eliminates the need for you to complete a FSAFEDS claim form and submit it along with your Explanation of Benefit statements to FSAFEDS. Instead, once your participating FEHB plan processes your medical and/or prescription claims, they will automatically submit your out-of-pocket expense(s) electronically to FSAFEDS for automatic reimbursement for your Health Care Flexible Spending Account (HCFSA). Not only are you saving money with your HCFSA, you are avoiding paperwork as well! If your FEHB Plan is not currently participating, you may provide your email address in the “My Account” section of the web site so that you will be notified as to when they begin to participate. Click Paperless Reimbursement for more information.

Do I need a claim form and where do I find it?
Yes. Unless you are participating in paperless reimbursement, FSAFEDS requires that you complete and submit a claim form with SHPS to be reimbursed. Click on the link to download a Claim Form.

What supporting documentation do I need to submit with a claim form?
Health Care Expenses: In addition to completing the claim form, the documentation under one of the two items below must be attached:

  • Explanation of Benefits Statement (EOB): This is the statement you receive each time you, or a health care provider, submit medical, dental, or vision claims for payment to your health, dental, or vision care plan. The EOB will show the amount of expenses paid by the plan and the amount you must pay. For expenses that are partially covered by your (or your dependent's) medical, dental or vision plans, you must attach the EOB. If you are covered under a HMO or PPO, indicate "Co-pay" on Part II of the FSAFEDS claim form under "Type(s) of Service".
  • All Other Expenses Not Covered or Reimbursed by your FEHB or Other Health Plan: For expenses not covered or reimbursed at all by your (or your dependent's) medical, dental or vision plans, claims will require acceptable evidence of your expenses. A cancelled check alone is not acceptable evidence. Acceptable evidence includes detailed receipts, which contain the following information:
    • Type of service or product provided (the name of the prescription is not required, as long as the receipt indicates that the product was a prescription drug)
    • Date expense was incurred
    • Yours, your spouse’s or dependent’s name for whom the service/product was provided, unless it is an over-the-counter medication
    • Person or organization providing the service, unless it is an over-the-counter medication
    • Amount of expense
Note: If your FEHB plan participates, you may choose the option of paperless reimbursement, which means you do not have to manually prepare and file certain health care claims with FSAFEDS. Your participating FEHB health plan will electronically submit your out-of-pocket expenses for you. See the section below titled Paperless Reimbursement for more information. To view the list of current health plans participating in paperless reimbursement, click here.

Dependent Care Expenses:

  • For allowable Dependent Care expenses, attach a copy of the bill or signed receipt, or have the provider complete the "Dependent Care Affidavit and Reimbursement Request" on the claim form for FSAFEDS.
  • Requests cannot be processed without the Tax ID or SSN for all providers. You must provide this number each time you submit a claim.

How does reimbursement for Orthodontics work?
You incur the expense for braces when you pay, so save your receipts. You’ll be able to submit a claim for expenses you pay during the current Plan Year, even if the actual braces were put on in a different Plan Year. Click on the link for more information on Orthodontics.

Is there a fee for electing an FSA account?
There is a fee associated with participating in the Federal FSA Program, however, there is no cost to you, the participant. Legislation was passed in November 2003 that requires all employing entities of the Government that provide or plan to provide the FSAFEDS program for its employees, to pay the administrative fee(s) on behalf of their employees.

How long will it take to receive reimbursement?
In almost all instances, if you fax your claim to FSAFEDS it should take no longer than five to seven business days from the time you submit your claim until you receive your funds if you use direct deposit through Electronic Funds Transfer (EFT). However, your bank's EFT deposit policy may require up to a 3-day hold on funds before actually posting to your account. Please check with your individual banking institution if you have questions regarding EFT deposits. Using the EFT option will result in funds reaching your account more quickly because it eliminates creating and posting a check.

Health care reimbursements will be paid in full at the time you incur them regardless of how many allotments have been taken from your pay. However, dependent care expenses will only be paid up to the amount you have contributed to your account through your per pay allotments. As soon as your next allotment is received, the balance will be issued to you up to the amount of your allotment.

If you participate in paperless reimbursement, your FEHB plan automatically forwards your claims to FSAFEDS weekly, which means it may take up to 10-12 business days from the time your FEHB plan submits your claim to your funds being deposited into your account via EFT. The payment schedule for retail and mail order pharmacy vendors is generally longer than what you may experience for medical and dental claims. The longer payment schedule means your pharmacy claims will most likely take even longer to be reimbursed by FSAFEDS.

If during the year I realize that I have elected too much, can I change my allotment?
You may not change your election unless you have a Qualified Status Change. After you enroll, a confirmation statement will be Emailed or mailed to you. You may also print it directly from the web. This statement can be used to ensure that the binding elections you make are the ones you want.

What is use-it-or-lose-it?
Use-it-or-lose-it refers to an IRS requirement that if you do not spend all the money you have elected into your HCFSA or DCFSA accounts, that money cannot be rolled over or refunded to you. You need to look at several sections of the IRS Code to find this requirement. Section 125 of the Internal Revenue Code (26 CFR 1.125) is the section of the IRS code that makes it possible for employers to offer their employees a choice between cash salary (your regular salary) and a variety of nontaxable benefits, called qualified benefits. A qualified benefit is a benefit that does not defer compensation, and which is excludable from an employee's gross income under a specific provision of the Code.

Employers may offer flexible spending accounts to employees under a cafeteria plan. FSAs provide coverage under which specified, incurred expenses not reimbursed under any other health plan and dependent care assistance program may be reimbursed to the employee pre-tax. Contributions to the FSA occur when an employee agrees to contribute a portion of his/her salary (reducing salary) and the employer agrees to contribute that portion to an FSA for that employee. Since you never receive the money (called constructive receipt), you can't be taxed on it. If you were able to get unused amounts out of your FSA at the end of the year, you would be receiving deferred compensation, which is expressly prohibited by Section 125. Thus, the use-it-or-lose-it rule.

See Section 125-1, Q&A-17;, Section 125-2, Q&A-7; (a) and (b)(1) through (7) at www.irs.gov.

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General Information  |  Print General Information
What are FSAs?
A Health Care FSA (HCFSA) pays for the uncovered or unreimbursed portions of qualified medical costs. A Dependent Care FSA (DCFSA) allows you to pay eligible expenses for dependent care with pre-tax dollars. All employee contributions to FSAs are made from pre-tax earnings, thereby increasing disposable income. There are no government contributions to the FSAFEDS program. The U.S. Office of Personnel Management (OPM) has contracted with a third party administrator, SHPS, Inc., to manage the program. By law, retirees, both Federal and non-Federal, are not eligible to maintain FSAs.

If you would like to establish a DCFSA or HCFSA you must do so during Open Season on an annual basis. Account elections will not automatically roll over to future years. An FSA ELECTION IS 100% VOLUNTARY. The FSAFEDS Open Season is held each fall in conjunction with the FEHB Open Season from mid-November to mid-December. Eligible employees may elect up to $5,000 for a DCFSA and $4,000 for a HCFSA.

The Federal FSA program is a tax-qualified program based on the guidelines in sections 105,125, and 129 of the Internal Revenue code.

What’s the difference between a Dependent Care Flexible Spending Account and a Health Care Flexible Spending Account?
A Health Care Flexible Spending Account pays for the qualified medical expenses not covered or reimbursed by your FEHB plan or any other type of insurance.

The other FSA, a Dependent Care Flexible Spending Account, pays for childcare or adult dependent care expenses that are necessary to allow you or your spouse to work, look for work, or attend school full-time.

Despite the differences between each account, both accounts allow you to pay for these qualified expenses with pre-tax dollars, money that is deducted from your paycheck before taxes are taken out by your employer - saving you 20% to 40% or more.

After contributing to one or both FSA accounts, how can I check my account balance within the Plan Year?
There are several ways you can check your account:

  • You can access your account via the Internet by going to www.fsafeds.com and using the secure account inquiry system;
  • You may call the FSAFEDS phone system at 1-877-FSAFEDS (372-3337), (TTY line: 1-800-952-0450) to check your account balance and retrieve information on when the last claim was paid.
  • Your account balance will be displayed on the Explanation of Benefits (EOB) issued by FSAFEDS, via Email or regular mail, when your claims are processed. The EOB will be emailed if FSAFEDS has your Email address on file. If the claim is partially or fully denied, or FSAFEDS does not have your Email address on file, the EOB will be mailed to your home address.
  • You will also receive a statement from FSAFEDS no later than October 31 in the Plan Year and no later than January 31, after the end of the Plan Year, notifying you of how much remains in your Health Care and/or Dependent Care FSA, as well as summarizing claims paid to date. All claims must be submitted or postmarked by April 30 following the end of the Plan Year.

When will FSAs be available to me?
Unless you are a new hire or newly eligible employee, you can only enroll in FSAFEDS as part of the annual FEHB Open Season held in the fall of each year, from mid-November to mid-December and your elections become effective for the next calendar year. As FSA elections are completely voluntary, you must re-enroll each year.

Do I have to give FSAFEDS my Social Security Number?
Yes, you do if you wish to enroll in this program for either a Health Care or Dependent Care Flexible Spending Account. A flexible spending account sets aside part of your salary before taxes. Since this is a payroll action, your Social Security Number is required to enroll. If you do not provide your Social Security Number, your election will not be able to be matched with your payroll provider and the deduction will not be taken from your pay, therefore voiding your election.

As part of your enrollment, you may choose an alternate ID to use when checking on your personal account(s) via the FSAFEDS web site, using the interactive voice response system by phone, or speaking with an FSAFEDS Benefits Counselor.

Will I have a chance to change my elections each year?
Yes. In fact, you must re-enroll in the FSAs each Plan Year if you wish to maintain a dependent and/or health care account. Elections in FSAs do not carry over from one Plan Year to another. Each Plan Year is separate from every other Plan Year, so you will be given an opportunity each year to make different elections. This applies to which type of FSA you wish to participate in, as well as the dollar amounts you want to set aside in each account.

What are the advantages of having an FSA?
FSAs allow you to make pre-tax salary contributions to pay for qualified medical expenses that are not reimbursed by FEHB or any other source, and to pay dependent care expenses. That helps to make these out-of-pocket expenses more affordable. By reducing taxable income, FSAs actually increase disposable income. The funds put into an FSA are not subject to Federal income and FICA taxes, nor most state and local income taxes. The bottom line is you save 20% to 40% on covered expenses.

What is the "Plan Year"?
The Plan Year is the calendar year. Any money that you elect to set aside in a flexible spending account for a given Plan Year may be used only for eligible expenses you incur for services received during that Plan Year.

When does the Plan Year start and end?
Beginning in 2004, and for each year thereafter, the Plan Year runs from January 1 through December 31.

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Changing Your Election  |  Print Changing Your Election

If I find out that I elected too much money for my HCFSA and/or DCFSA, can I change my allotment during the year?
Generally no, your election is irrevocable for that Plan Year unless you experience a Qualified Status Change.

Qualified Status Changes (QSCs) are events that allow you to change your FSA election outside of Open Season and include:

  • Change in your legal marital status (i.e., marriage, legal separation, divorce, death of a spouse)
  • Change in your number of dependents
  • Birth or adoption of a child, or placement for adoption
  • Death of your dependent
  • Change in your dependent's eligibility (e.g., at age 13 your child is no longer eligible for coverage under a DCFSA)
  • Change in cost or coverage, for example
    • you’ve changed your daycare provider, or your current provider changes the amount that he or she charges
    • your child begins attending school full-time, and you only need after-school care, rather than full-time care
    • you’ve had to change your FEHB plan mid-year, and your new plan has different benefits and cost-sharing
  • Change in employment status (for employee, spouse, or employee’s dependent) that affects your health insurance eligibility
  • Change in residence affecting your eligibility for health care benefits. (e.g., a move to an area that would require you to elect a new FEHB or other insurance plan).
  • Change in the number of your tax dependents (e.g., birth of child, parent now resides with you, etc.)

If you, your spouse or dependent(s) experience a QSC, you may change your election(s) in FSAFEDS. The change you request must be consistent with the event that prompted the election change. For example, if you get married, you may want to increase the amount of your HCFSA to cover the additional out-of-pocket medical, dental, and/or prescription drug costs incurred by your spouse. Likewise, if you adopt a baby you may want to increase your HCFSA and/or DCFSA elections to cover the added medical expenses and/or daycare costs you might incur for your new child. On the other hand, if you were to divorce and lose a dependent, you would not be able to increase your election amount, as that action would be inconsistent with your status change.

If you have experienced a QSC and wish to make a change, you can notify FSAFEDS anytime from 31 days before to 60 days after the date of the event. You can do this either by downloading a Qualified Status Change Form from www.fsafeds.com or by calling an FSAFEDS Benefits Counselor toll-free at 1-877-FSAFEDS (372-3337) Monday through Friday from 9 A.M. until 9 P.M. Eastern Time.

After completing the Qualified Status Change Form, you must mail it to FSAFEDS or fax it to 1-502-267-2233. FSAFEDS will verify that your event is a QSC. After verification, FSAFEDS will process the election change you requested.

Plan ahead! We generally respond to your QSC request within 48-hours. However, the effective date of your election change depends upon when our next request for an allotment is due to your payroll provider. Please refer to the Payroll Schedule for your payroll provider to see when your change will be effected. If you have an upcoming QSC that will reduce your annual election, we suggest you submit your request 30 days in advance of the event. If your requested change is due to the birth or adoption of a child, the change will be retroactive to the child’s date of birth, date of adoption, or placement for adoption, consistent with the requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Note: You have 60 days from the date of the event, or no later than October 1 of any Plan Year to make a Qualified Status Change.

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Dependent Care FSA (DCFSA)  |  Print Dependent Care FSA (DCFSA)

What is a Dependent Care FSA?

Who is a qualifying dependent for a DCFSA?
A qualifying dependent is a:

  • Dependent of the enrolled employee who is under age 13; or
  • Dependent or spouse of the enrolled employee who is mentally or physically incapable of caring for himself or herself, and who the employee claims as a dependent on his or her Federal Income Tax return.

To claim dependent care expenses, you must meet the following conditions:

  • You must have incurred the expenses in order for you and your spouse to work or look for work unless your spouse was either a full-time student or was physically or mentally incapable of self-care.
  • The payments for care cannot be paid to someone you can claim as your dependent on your return or to your child who is under age 19.
  • Your filing status must be single, head of household, qualifying widow(er) with a dependent child, married filing jointly, or married filing separately.
  • The care must have been provided for one or more qualifying persons identified on the form you use to claim the credit.
  • You (and, if you're married, your spouse) must maintain a home that you live in with your qualifying child or dependent.

Can I use a Dependent Care FSA to pay for a babysitter in my home rather than using a daycare facility?
Yes. You can include expenses paid to a babysitter if the services are necessary in order for you and your spouse, if married, to work, look for work, or for your spouse to attend school full-time.

My under-age-13 child goes to day camp during the summer. Is that qualified childcare?
Yes, if attendance at that camp allows you and your spouse to work, look for work, or for your spouse to attend school full-time.

My under-age-13 child goes to private school. Are tuition payments qualified childcare?
No. School tuition is not childcare. But before/after school care is a qualified expense. Your provider may be required to itemize the costs between tuition and before/after school care.

I pay my daycare center the same amount every single week. Do I have to submit a claim every week or can I set it up to automatically receive reimbursement?
You must submit a claim every time you wish to request reimbursement of an expense. There is no automated process. Many individuals file claims monthly to eliminate weekly claim submission. However, it truly depends on your specific needs and whether you can wait until the end of the month for reimbursement or if you need to receive funds weekly. Regardless of the amount on your claim you will only be reimbursed up to the amount in your account at that time.

My child turns 13 in the middle of a week. Can I submit a bill for the whole week’s childcare?
You can submit a bill for the portion of the week during which your child was under age 13.

Can I be reimbursed for dependent daycare expenses once I have paid for them?
Eligible Dependent Care expenses are reimbursable when they are actually incurred. Expenses are treated as incurred when you are provided with the service, not when you are billed or pay for the service.

What happens if my babysitter does not have a Tax Identification Number (TIN) as required on the claim form?
If your babysitter does not have a TIN, you must submit his/her nine-digit Social Security Number with your claim form. If your provider does not have a Social Security Number, you will be required to submit a letter indicating that you have attempted to obtain a SSN or TIN from the provider and you are unable to do so, as the provider does not have one or will not provide it to you.

Are there limitations that apply to DCFSAs on an aggregate basis?
The maximum amount you may elect to a DCFSA is set at $5,000 by law. This $5,000 limitation is the maximum pre-tax benefit for all dependent care programs available to you, including programs other than FSAs. As a result, if you are receiving a childcare subsidy and the combined benefit to you exceeds the $5,000 limit, both you and the Agency will be responsible for tax on any aggregate amount that exceeds $5,000 ($2,500 if married but filing separately).

Amounts exceeding the applicable limit could also happen if both spouses work for employers offering an FSA program and both choose a DCFSA, which combined, exceeds the applicable limit of $5,000 ($2,500 if married and filing separately).

What should I know about a DCFSA versus Child Care Tax Credits?
Depending upon your particular tax situation, it may be more advantageous to you to use the tax credit rather than a DCFSA exclusion. The amount of the DCFSA exclusion is limited to $5,000 per tax year ($2,500 for married individuals filing separate returns). If the applicable limitation is exceeded, the excess is included in income and taxable. There is a Dependent Care Tax Credit Worksheet that can help you determine which option is best for you.

You may also wish to consult a tax professional if you are unsure of which option is more beneficial for your particular tax situation.

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Effective Date  |  Print Effective Date
I enrolled during Open Season, when will my HCFSA or DCFSA be effective?
Your election will be effective for any expenses incurred on or after January 1, 2004.

I enrolled with an absentee or belated enrollment, when will my HCFSA or DCFSA be effective?
If you enrolled with an absentee or belated enrollment in one or both of the FSAs outside of Open Season, your account becomes effective the day following acceptance of your election form.

I enrolled as a new employee outside of Open Season, when will my HCFSA or DCFSA be effective?
If you are a new employee enrolling in one or both FSAs, your account becomes effective on the day following acceptance of the election form, generally the day after you enroll.

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Eligible Expenses  |  Print Eligible Expenses
What types of expenses are eligible for reimbursement?
FSAFEDS follows IRS guidelines for what types of expenses may be reimbursed under a Health Care FSA (HCFSA) and a Dependent Care FSA (DCFSA).

Eligible HCFSA Expenses:

For a more detailed listing of eligible expenses, see our Eligible Expenses Listing.

For a listing of eligible medical expenses please see United States Code 26 Section 213(d) or IRS Publication 502. Note: While insurance premiums are included in Publication 502, they are NOT reimbursable expenses for FSA purposes. Insurance premiums, including those for Long-Term Care and Temporary Continuation of Coverage, are not eligible for reimbursement.

Eligible DCFSA Expenses:

  • amounts paid for services--rendered in or outside of your home--for the care of a qualified dependent necessary to allow you and your spouse to work, look for work, or attend school full-time
  • limited to amounts paid for services rendered in your home or amounts paid for services rendered outside of your home for the care of a qualified dependent. The services rendered must be necessary to allow you and your spouse to work, look for work, or attend school full-time
  • limited to the amount in your DCFSA at the time a claim is reimbursed
  • not covered, paid, reimbursed, or reimbursable from any other source

What is an eligible health care expense?
For a definition of eligible medical expenses please see United States Code 26 Section 213(d). For a listing of eligible health care/medical expenses, refer to IRS Publication 502. Note: While insurance premiums are a tax-deductible medical expense, and are listed as such in Publication 502, they are NOT reimbursable expenses for FSA purposes. Insurance premiums, including those for FEHB, Tricare, Long-Term Care and Temporary Continuation of Coverage, are not eligible for reimbursement.

Eligible HCFSA Expenses:

  • cannot be taken as a deduction from your Federal Income Tax return in any tax year even though they qualify as eligible expenses that could be deducted. You may not take both options. You must either declare them on your tax return OR get reimbursed for those expenses through your FSA
  • are not covered, paid, or reimbursable from any other source
  • do not include reimbursements for premiums for health insurance
  • while not limited to the dollar amount in your HCFSA at the time a claim is reimbursed, are limited to the total amount you elected (minus any amounts you have been reimbursed for claims submitted earlier in the Plan Year)

What is an eligible dependent care expense?
Eligible DCFSA Expenses are:

  • amounts paid for services--rendered in or outside of your home--for the care of a qualified dependent necessary to allow you and your spouse to work, look for work, or attend school full-time
  • limited to amounts paid for services rendered in your home or amounts paid for services rendered outside of your home for the care of a qualified dependent. The services rendered must be necessary to allow you and your spouse to work, look for work, or attend school full-time
  • limited to the amount in your DCFSA at the time a claim is reimbursed
  • not covered, paid, reimbursed, or reimbursable from any other source

What is a "qualifying" child or dependent?
Your child must have been under age 13 when care was provided and you must be able to claim the child as an exemption on your tax return. (For an exception to this rule, see "Child of Divorced or Separated Parents" in Publication 503, Child and Dependent Care Expenses.) Your spouse who is mentally or physically unable to care for himself or herself also qualifies. A dependent of any age (i.e. a parent) who is physically or mentally incapable of self-care also qualifies if the person can be claimed as an exemption on your tax return (or could have been claimed, except for the fact that the person had $3,050 or more of gross income).

Can I submit health care expenses that my family incurs for reimbursement from my HCFSA account?
Yes. You may request reimbursement for health care expenses incurred by you, your spouse and/or any of your dependents that you can claim on your tax return.

I have self-only FEHB coverage. Can I still submit expenses for other members of my family?
Yes, as long as you are able to claim them as a dependent on your Federal Tax return. Your HCFSA dependent is different than your FEHB dependent.

How does reimbursement for Orthodontia work?
You incur the expense for braces when you pay, so save your receipts. You’ll be able to submit a claim for expenses you pay during the current Plan Year, even if the actual braces were put on in a different Plan Year. Click on the link for more information on Orthodontia.

My child is getting braces. How does this work with the “expense incurred during the Plan Year” since I’ll be paying for this over the next X number of years?
You incur the expense for braces when you pay, so save your receipts. You’ll be able to submit a claim for expenses you pay during the current Plan Year, even if the actual braces were put on before the current Plan Year. Initial payments for orthodontia expenses can be reimbursed with a paid receipt. However, down payments for orthodontia expenses cannot be reimbursed and you cannot be reimbursed for any work completed prior to your effective date in the plan. For more information on eligible orthodontia expenses, view the Orthodontia Quick Reference Guide.

I know insurance premiums aren’t qualified FSA expenses but what about co-payments and deductibles under my health insurance?
Co-payments and deductibles are eligible expenses. Be sure you save your receipts!

Can I be reimbursed under my HCFSA for email or phone consultation with my physician?
Yes, fees associated with telephone or email consultation with your physician are eligible for reimbursement under your HCFSA.

Are health maintenance fees for physician practices eligible for reimbursement from my HCFSA?
No. Only expenses for services actually provided/incurred are eligible for reimbursement from your HCFSA.

How does the new IRS ruling regarding over-the-counter (OTC) drugs impact my HCFSA?
Previously, your HCFSA could reimburse medicines and drugs if they were only available with a prescription. Now, if certain requirements are met, your HCFSA can reimburse medicines and drugs that are available without a prescription! (OTC medicines and drugs are still not deductible for Federal Income Tax purposes.)

What kinds of OTC medicines or products are eligible for reimbursement through my HCFSA?
The IRS has concluded that non-prescription antacids, allergy medicines, pain relievers, cold medicines and other medicines or products purchased to alleviate or treat the personal injuries or sickness of you and/or your dependents are eligible items for reimbursement through a HCFSA. Vitamins and other dietary supplements that are merely beneficial to you and/or your dependent remain ineligible for reimbursement. We have developed an OTC Quick Reference Guide to help you know what kinds of expenses may be reimbursed. If you have questions about the eligibility of a certain item(s), call an FSAFEDS Benefits Counselor at 1-877-FSAFEDS (372-3337) Monday through Friday between the hours of 9 A.M. and 9 P.M. Eastern Time. Keep in mind that when submitting a claim for over-the-counter medicines and products, a detailed receipt naming the product will be required.

When is this change effective? Can I submit claims for over-the-counter medications purchased at any time in the past year?
The change is effective for the 2004 Plan Year that began January 1, 2004 and over-the-counter medications must be purchased on or after January 1, 2004 to be eligible for reimbursement through your HCFSA.

What requirements must be met for an OTC drug to be eligible for reimbursement through my HCFSA?

What OTC items are not eligible for reimbursement?
Items are not eligible for reimbursement if they are normally used for general health or are used even when there is not a medical condition being treated (ex. toothpaste, mouthwash, lotion, shampoo) or are cosmetic in nature (teeth whitening products, wrinkle reducers).

Some OTC drugs can be used either for medical purposes or for general health/cosmetic purposes. Are these dual-purpose items reimbursable?
Any claim for a dual-purpose item must be accompanied by additional supporting documentation from a licensed medical practitioner. This documentation must:

FSAFEDS has published an OTC Quick Reference Guide that describes the types of medications that are eligible and ineligible for reimbursement. You can also call an FSAFEDS Benefits Counselor at (372-3337) Monday through Friday between the hours of 9 A.M. and 9 P.M. Eastern Time if you have questions about the eligibility of a certain item(s).

What documentation do I need to submit for reimbursement of eligible OTC drugs?
Along with your completed and signed claim form, you need to submit an itemized receipt from the provider indicating the following:

If your receipts do not have this information preprinted, you will need to submit the product label, along with the receipt with the price. Your signature on the claim form certifies that you, your spouse or your dependent will use the item purchased.

I currently participate in the HCFSA and I just found out that OTC medicines are reimbursable. Can I increase the amount I elected when I initially enrolled?
No, you may not change your election amount mid-year as a result of this recent ruling by the IRS. However, you should take into account your ability to claim these items for reimbursement when considering your election amount for the 2005 Plan Year.

Am I able to claim OTC medications for income tax purposes if I choose not to participate in the HCFSA?
No, the IRS has ruled this benefit applies solely to flexible spending accounts and non-prescription items continue to be non-deductible on your income tax.

Can I purchase large quantities of OTC drugs?
Reasonable quantities of OTC drugs are reimbursable if purchased for either existing or imminent medical conditions. If large quantities are necessary for the treatment of an existing condition, a letter from a medical practitioner (as described above in the question titled “Some OTC drugs can be used for medical purposes of for general health/cosmetic purposes”) must also indicate that the quantity being purchased is necessary for the treatment of the diagnosed medical condition.

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Eligibility to Enroll  |  Eligibility to Enroll
Who is eligible for a Health Care Flexible Spending Account?
Eligible participants for the Health Care FSA are those Federal employees eligible to enroll in the FEHB program. All eligible Federal employees of Executive Branch Agencies and other Federal employers who have agreed to offer the FSAFEDS program may make an election immediately upon entry on duty with the exception that temporary Federal employees are eligible only upon completion of one year of continuous service in the job position.

I’m not enrolled in the FEHB program, but I’m in a position that conveys eligibility. Am I eligible for this program?
Yes. Eligibility for the FEHB Program is the key. You need not be enrolled in FEHB to elect a HCFSA.

Who is eligible for a Dependent Care Flexible Spending Account?
All Federal employees of executive branch agencies and adopting employers may participate in the Dependent Care FSA immediately upon their entry on duty, except certain intermittent employees whose appointment is six months or less.

Can annuitants participate in this program?
No. By law, annuitants (other than reemployed annuitants) cannot participate in FSAs. FSAs are a way of setting aside pre-tax salary for payment of eligible expenses. Annuitants receive annuities, which are not salary.

Is there any plan to add annuitants in the future?
No. The Internal Revenue Service defines the flexible spending account rules, and we know of no plans to expand this benefit beyond the payment of salary.

I'm Active Military - - am I eligible to participate in FSAFEDS?
No.  Military payroll does not participate in the program.

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Enrollment & Disenrollment  |  Print Enrollment & Disenrollment
I elected not to enroll in a HCFSA or DCFSA during the Open Season, will I have an opportunity to enroll at a later date?

Unless you are a new or newly eligible employee, experience a qualified status change (QSC), or qualify for a belated enrollment, you can only enroll in FSAFEDS during the annual Open Season.

For what reasons will my FSA terminate?
Your FSA terminates when:

  1. you separate from the Federal government
  2. you transfer to a Federal agency that is not covered by FSAFEDS
  3. the Plan Year ends, or
  4. your employing agency ceases participating.

Can I elect to allot money to a DCFSA but not a HCFSA, or vice-versa?
Yes. You don't have to enroll in both. You can enroll in both, just one, or neither.

If I decide not to elect to allot money for either a HCFSA or DCFSA, do I have to return the election form?
No. You only enroll if you want to participate. The default (if you take no action) is that you are NOT enrolled. In addition, you must renew your election each year. If you elect to allot money to a FSA during one Plan Year, you must execute an FSA election to participate for the following Plan Year. Otherwise, the allotment will cease and you will not have a FSA.

If I find out that I elected too much money for my HCFSA, can I change my allotment during the year?
Your election is irrevocable for that Plan Year unless you experience a Qualified Status Change.

Qualified Status Changes (QSCs) are events that allow you to change your FSA election outside of Open Season and include:

  1. Change in your legal marital status (i.e., marriage, legal separation, divorce, death of a spouse)
  2. Change in your number of dependents
  3. Birth or adoption of a child, or placement for adoption
  4. Death of your dependent
  5. Change in your dependent's eligibility (e.g., at age 13 your child is no longer eligible for coverage under a DCFSA)
  6. Change in cost or coverage, for example
    • you’ve changed your daycare provider, or your current provider changes the amount that he or she charges
    • your child begins attending school full-time, and you only need after-school care, rather than full-time care
    • you’ve had to change your FEHB plan mid-year, and your new plan has different benefits and cost-sharing
  7. Change in employment status (for employee, spouse, or employee’s dependent) that affects your health insurance eligibility
  8. Change in residence affecting your eligibility for health care benefits. (e.g., a move to an area that would require you to elect a new FEHB or other insurance plan).
  9. Change in the number of your tax dependents (e.g., birth of child, parent now resides with you, etc.)

If you, your spouse or dependent(s) experience a QSC, you may change your election(s) in FSAFEDS. The change you request must be consistent with the event that prompted the election change. For example, if you get married, you may want to increase the amount of your HCFSA to cover the additional out-of-pocket medical, dental, and/or prescription drug costs incurred by your spouse. Likewise, if you adopt a baby you may want to increase your HCFSA and/or DCFSA elections to cover the added medical expenses and/or daycare costs you might incur for your new child. On the other hand, if you were to divorce and lose a dependent, you would not be able to increase your election amount, as that action would be inconsistent with your status change.

If you have experienced a QSC and wish to make a change, you must notify FSAFEDS anytime from 31 days before to 60 days after the date of the event. You can do this either by downloading a Qualified Status Change Form from www.fsafeds.com or by calling an FSAFEDS Benefits Counselor toll-free at 1-877-FSAFEDS (372-3337) Monday through Friday from 9 A.M. until 9 P.M. Eastern Time.

After completing the Qualified Status Change Form, you must mail it to FSAFEDS or fax it to 1-502-267-2233. FSAFEDS will verify that your event is a QSC. After verification, FSAFEDS will process the election change you requested.

Plan ahead! Your election changes are effective with the first pay date following approval of the Qualified Status Change. If you have an upcoming QSC that will reduce your annual election, we suggest you submit your request 30 days in advance of the event. If your requested change is due to the birth or adoption of a child, the change will be retroactive to the child’s date of birth, date of adoption, or placement for adoption, consistent with the requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

Note: You have 60 days from the date of the event, but no later than October 1 of any Plan Year to make a Qualified Status Change.

I am in a situation that requires me to leave the country or otherwise be unable to enroll during the Open Season although I’m still active on my agency’s payroll. Is there an option for an “Absentee Enrollment”?
FSAFEDS will accept a belated “absentee” enrollment if you were unable to enroll during the Open Season for reasons outside of your control (e.g., you were out of the country and did not have access to the Web site during the Open Season). If you wish to make a belated enrollment due to extenuating circumstances, you will need to complete an Absentee Enrollment form. The Absentee Enrollment form can be downloaded from the FSAFEDS Web site. This form should be completed within 30 days of return to your duty station but no later than October 1 of any Plan Year.

Since all FSA elections must be made prospectively, the belated enrollment is effective the day after your election has been accepted by FSAFEDS and cannot be changed unless you experience a Qualified Status Change. Claims for services rendered prior to the enrollment effective date will not be paid. If you have questions concerning belated “absentee” enrollment, you may call the toll-free number, 1-877-FSAFEDS (372-3337), (TTY line: 1-800-952-0450) and speak to a Benefits Counselor Monday through Friday between the hours of 9 A.M. and 9 P.M. Eastern Time.

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Filing Claims For Reimbursement  |  Print Filing Claims For Reimbursement

Do I need a claim form and where do I find it?
Yes. Unless you are participating in paperless reimbursement, FSAFEDS requires that you complete and submit a claim form with SHPS to be reimbursed. Click on the link to download a Claim Form.

How do I file a claim?
You will need to complete and submit the FSAFEDS claim form to be reimbursed for both dependent care and health care expenses.

  • Claim Form - to submit eligible expenses for reimbursement

Faxing your claim(s) to FSAFEDS is the preferred method for submitting claims, and will generally result in your claim being processed faster than if you mail in your claim. The FSAFEDS 24-Hour fax line is:

  • 1-502-267-2233

You will also receive an Email confirmation (if you provided your Email address to FSAFEDS) when we receive your faxed claim, and an additional Email confirmation will be sent to you when your claim has been processed.

If you prefer to file your claims by mail, you have two options:

  • Mail
    FSAFEDS Program
    PO Box 36880
    Louisville, KY 40233-6880
  • Express Mail
    SHPS, Inc.
    11405 Bluegrass Parkway
    Louisville, KY 40299
    Attn: FSAFEDS Program

Once your claim form has been processed and accepted, payment will be issued to you in the format you requested during enrollment which is either by a check in the mail or through Electronic Funds Transfer (EFT). You will receive your money faster through EFT and can sign up for it anytime, if you did not do so during enrollment, by downloading and submitting an EFT Form.

  • EFT Form - Electronic Funds Transfer (EFT) enrollment form for direct deposit of reimbursements. Once your claim is processed, FSAFEDS will release your reimbursement the next business day. However, some banks hold your funds for one or more days before actually posting to your account. Please check with your individual banking institution for specific information on your bank’s EFT deposit policy.

What supporting documentation do I need to submit with a claim form?
Health Care Expenses: In addition to completing the claim form, the documentation under one of the two items below must be attached:

  • Explanation of Benefits Statement (EOB): This is the statement you receive each time you, or a health care provider, submit medical, dental, or vision claims for payment to your health, dental, or vision care plan. The EOB will show the amount of expenses paid by the plan and the amount you must pay. For expenses that are partially covered by your (or your dependent's) medical, dental or vision plans, you must attach the EOB. If you are covered under a HMO or PPO, indicate "Co-pay" on Part II of the FSAFEDS claim form under "Type(s) of Service".
  • All Other Expenses Not Covered or Reimbursed by your FEHB or Other Health Plan: For expenses not covered or reimbursed at all by your (or your dependent's) medical, dental or vision plans, claims will require acceptable evidence of your expenses. A cancelled check alone is not acceptable evidence. Acceptable evidence includes detailed receipts, which contain the following information:
    • Type of service or product provided (the name of the prescription is not required, as long as the receipt indicates that the product was a prescription drug)
    • Date expense was incurred
    • Yours, your spouse’s or dependent’s name for whom the service/product was provided, unless it is an over-the-counter medication
    • Person or organization providing the service, unless it is an over-the-counter medication
    • Amount of expense
Note: If your FEHB plan participates, you may choose the option of paperless reimbursement, which means you do not have to manually prepare and file certain health care claims with FSAFEDS. Your participating FEHB health plan will electronically submit your out-of-pocket expenses for you. See the section below titled Paperless Reimbursement for more information. To view the list of current health plans participating in paperless reimbursement, click here.

Dependent Care Expenses:

  • For allowable Dependent Care expenses, attach a copy of the bill or signed receipt, or have the provider complete the "Dependent Care Affidavit and Reimbursement Request" on the claim form for FSAFEDS.
  • Requests cannot be processed without the Tax ID or SSN for all providers. You must provide this number each time you submit a claim.

If I incur expenses on December 31, but don’t submit my claim until the next year, am I paid out of my contributions for the year I incurred the expense or the year I submitted my claim?
Claims are paid out of funds in your account in the Plan Year during which you incur the expense, not the year you submitted your claim or paid for your service. An exception would be if you had a prescription filled on Dec. 31 but did not pick up and pay for the medications until Jan. 2. If you provide a receipt showing when you picked up the prescription, you will be reimbursed from the current year account.

Can I submit claims during the Plan Year for expenses that I incurred prior to my effective date?
No. You submit claims for expenses you incur on or after the first day of the Plan Year during which you’re enrolled.

How long after the end of the Plan Year do I have to submit my receipts?
You have until April 30 of the following Plan Year to submit claims for expenses incurred during the previous Plan Year.

Can I receive reimbursement for a claim that exceeds the current amount in my FSA account?
The answer depends on the type of FSA you have:

Can I contribute money directly to my account by sending FSAFEDS a check?
Not if you intend to use pre-taxed money. Contributions must be deducted from your salary to be in a pre-tax status. While you are permitted to pay FSAFEDS directly, the money would be taxed.

How long will it take to receive reimbursement?
In almost all instances, if you fax your claim to FSAFEDS it should take no longer than five to seven business days from the time you submit your claim until you receive your funds if you use direct deposit through Electronic Funds Transfer (EFT). However, your bank's EFT deposit policy may require up to a 3-day hold on funds before actually posting to your account. Please check with your individual banking institution if you have questions regarding EFT deposits. Using the EFT option will result in funds reaching your account more quickly because it eliminates creating and posting a check.

Health care reimbursements will be paid in full at the time you incur them regardless of how many allotments have been taken from your pay. However, dependent care expenses will only be paid up to the amount you have contributed to your account through your per pay allotments. As soon as your next allotment is received, the balance will be issued to you up to the amount of your allotment.

If you participate in paperless reimbursement, your FEHB plan automatically forwards your claims to FSAFEDS weekly, which means it may take up to 10-12 business days from the time your FEHB plan submits your claim to your funds being deposited into your account via EFT. The payment schedule for retail and mail order pharmacy vendors is generally longer than what you may experience for medical and dental claims. The longer payment schedule means your pharmacy claims will most likely take even longer to be reimbursed by FSAFEDS.

Who sends me the check for reimbursement? Is it a Government check?
FSAFEDS will send you your reimbursement through the program’s administrator, SHPS, Inc. It is not a Government check.

Can I submit claims for dependent care expenses that exceed the current amount in the account?
Yes, but unlike HCFSAs, you cannot be reimbursed for a DCFSA claim for an amount that is more than what you have contributed to the account at the date of the claim submission. For example, if you contribute $500 monthly you will only be able to get reimbursed for $500 per month.

Must I have the full allotted amount in my HCFSA account before I can submit claims for expenses/services incurred?
No. Unlike DCFSA’s you will be fully reimbursed for eligible claims incurred prior to the end of the Plan Year not to exceed the annual amount you elected. This is true regardless of how much you have contributed to the account, as long as you are an active participant in the program.

If you enter a period of Leave Without Pay (LWOP), your account will be frozen for services incurred during your LWOP, until you resume allotments. Upon your return, you need to "catch-up" the remaining balance of your elected amount. Your per pay period allotment will be increased by 20% until your election is current. If increasing your allotment will not meet your election by the end of the Plan Year and there are less than five pay dates remaining in the year, your per pay allotment amounts will then be increased proportionally among the remaining pay dates in the Plan Year so that your account is paid in full on the last pay date of the year.

What if I go on a period of Leave Without Pay (LWOP) and incur an expense?
If you go into a period of LWOP and have not pre-paid your allotment, your FSA account will be frozen and you will not be eligible for reimbursement of any HCFSA expenses incurred during that period until the Plan Year ends or until you return to pay status and begin making allotments again. However, if you have a DCFSA, dependent care expenses you incur during your leave that meet IRS guidelines for eligible expenses. (i.e., you must incur the expenses in order to allow you and your spouse to work or attend school) may be reimbursed up to your account balance.

When you return to pay status your allotments will increase by 20% of the deductions not taken during your period of leave without pay. If there are less than five pay dates remaining in the year when you return to duty, your deductions will increase proportionately over the number of pay dates remaining in the Plan Year so that your account is paid in full on the last pay date of the year.

You may also prepay your election by choosing a number of allotments that will meet your obligation prior to your leave either during Open Season or by contacting FSAFEDS. If you choose to prepay, you will still be considered an active participant and any claim you submit during your period of LWOP will be reimbursed.

Please note that LWOP is not a Qualified Status Change event, unless activated to military service.

Must I have the full allotted amount in my DCFSA account before I can submit claims for expenses incurred?
No, but unlike the HCFSA, your DCFSA reimbursement is always the lesser of:

  1. the amount that you request for reimbursement
  2. the amount in your account at the time your claim is processed

If you file a claim that exceeds the amount, FSAFEDS will reimburse you up to the amount in your account at the date of submission, and pend the balance until you make another allotment into your DCFSA.

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Financial Facts  |  Print Financial Facts
Is there a maximum or minimum amount that I can allot for a HCFSA or DCFSA?
The maximum annual election for the HCFSA is $4,000.00. The DCFSA maximum annual election is $5,000.00 per household or $2,500.00 if married, filing separately. The minimum annual election for Health Care FSA and Dependent Care FSA is $250.00 per account.

My spouse has an FSA program at work too. Can I still contribute the full $4000 to the HCFSA even if my spouse is contributing at his/her workplace?
Yes, you can. There is no household limit on the amount that can be set aside for a Health Care Flexible Spending Account. The only limits are based on both specific plan limits, for instance, in FSAFEDS you can only elect up to $4,000 for a Health Care FSA.

My spouse has an FSA program at work too. Can I still contribute the full $5000 to the DCFSA even if my spouse is contributing at his/her workplace?
The total that can be elected for a Dependent Care FSA must not exceed $5,000 per household ($2,500 each if married and filing separately) in accordance with IRS rules. Therefore, you must ensure that you and your spouse limit your individual elections to total no more than $5000 combined.

Can I cancel my FEHB enrollment and elect to have the Government contribution toward FEHB premiums paid into my FSA instead?
No, you cannot. There is no provision to allow this.

If I elect to contribute to both a Health Care FSA and a Dependent Care FSA and I exhaust all of my health care money, can I use my dependent care account to pay for health care expenses?
No. The Health Care and Dependent Care FSAs are two separate accounts and money cannot be transferred between them, nor can claims be reimbursed that are not consistent with the expense eligibility requirement for each account.

If I didn't use all the money allotted to my HCFSA during the year, can I get the money refunded to me?
No. Under current tax rules, money cannot be carried over from one Plan Year to the next or refunded. You will forfeit any money not claimed by April 30 of the following year. This is the major reason employees need to be conservative in their estimate of how much money to allocate to an FSA.

Can my agency provide a waiver for me to recoup any funds remaining in my flexible spending account if I have not incurred expenses/services for the total amount I elect by December 31?
No. Your agency does not have the authority to provide waivers for you or any employee regarding funds that may be forfeited. Getting reimbursed for monies remaining in your FSAs after the Plan Year ends is considered deferred compensation and therefore expressly prohibited by IRC Section 125. Please see the FAQ titled "Where can I find the use-it-or-lose-it rule?” for more information about the use-it-or-lose-it rule.

Where can I find the use-it-or-lose-it rule?
The answer is derived from looking at several sections of the Internal Revenue Code (IRC). Section 125 of the IRC (26 CFR 1.125) is the section of the IRS code that makes it possible for employers to offer their employees a choice between cash salary (your regular salary) and a variety of nontaxable benefits, called qualified benefits. A qualified benefit is a benefit that does not defer compensation, and which is excludable from an employee's gross income under a specific provision of the Code.

Employers may offer flexible spending accounts to employees under a cafeteria plan. FSAs provide coverage under which specified, incurred expenses not reimbursed under any other health plan and dependent care assistance program may be reimbursed to the employee pre-tax. Contributions to the FSA occur when an employee agrees to contribute a portion of his/her salary (reducing salary) and the employer agrees to contribute that portion to an FSA for that employee. Since you never receive the money (called constructive receipt), you can't be taxed on it. If you were able to get unused amounts out of your FSA at the end of the year, you would be receiving deferred compensation, which is expressly prohibited by Section 125. Thus, the use-it-or-lose-it rule.

See Section 125-1, Q&A-17;, Section 125-2, Q&A-7; (a) and (b)(1) through (7).

What happens to the forfeited money?
The IRS has imposed strict regulations for the use of forfeited money. For FSAFEDS, forfeited funds will be set aside to offset future administrative costs incurred by SHPS for administering the program for the Federal government.

Is the money I elect to an FSA insured in any way? What if SHPS goes bankrupt?
FSAFEDS allotments do not belong to SHPS - they belong to the Plan. As the administrator, SHPS collects and maintains your allotments in a separate concentration bank account insured by the Federal Deposit Insurance Corporation (FDIC) and dedicated specifically to FSAFEDS. This money is completely separate from SHPS' operation accounts, and is not part of SHPS' assets. If SHPS were to declare bankruptcy, FSAFEDS funds would still be available, and would not be subject to SHPS creditors’ claims. The money would be transferred to the FSA administrator that replaced SHPS. This scenario is very unlikely as SHPS is one of the largest FSA administrators in the country and financially strong.

Do all my claims have to be submitted before the end of the year?
No. You have until April 30 of the following year to submit health care and dependent care claims. Generally, all eligible expenses must be incurred by December 31 of any Plan Year regardless of when they were paid for. For example, if you visit the dentist on December 28 but do not pay until January 12, the eligible expenses for this visit are reimbursable. An exception to the general rule is made for expenses for services that are sometimes prepaid, such as initial payments for orthodontia expenses.

Is there a fee for electing an FSA account?
There is a fee associated with participating in the Federal FSA Program; however, there is no cost to you, the participant. Legislation was passed in November 2003 that requires all Executive Branch agencies, as well as other employing entities of the Government that provide or plans to provide the FSAFEDS option for its employees, to pay the administrative fee(s) on behalf of their employees.

What if my agency withholds the wrong amount? What happens then?
If your agency payroll agency withholds the wrong amount, you should notify FSAFEDS. FSAFEDS will work with your agency to determine the required course of action.

If your agency payroll provider withholds less than your scheduled allotment, your pay period allotment will increase by 20% of the deductions not taken. If there are less than five pay dates remaining in the year when your allotment is missed, your deductions will increase proportionately over the number of pay dates remaining in the Plan Year so that your account is paid in full on the last pay date of the year. After the credit has been satisfied, regularly scheduled allotments would begin.

Are there any negative factors to the tax savings through an FSA?
While almost all employees benefit from the tax savings, your pre-tax contributions may slightly reduce your Social Security (SS) benefits at retirement. However, the value of your current year tax savings will more than offset the very slight reduction in SS benefits that occurs in future years. While it does not compute Social Security benefits, the FSAFEDS Calculator will allow you to view your potential tax savings.

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Health Care FSA (HCFSA)  |  Print Health Care FSA (HCFSA)

What is a Health Care FSA?
Health Care FSAs allow pre-tax reimbursement of eligible medical costs not covered or reimbursed by FEHB or any other insurance. Examples include FEHB plan deductibles, co-payments and co-insurance, dental, and vision services not covered by FEHB plans, etc. Insurance premiums, including Tricare, Medicare, Long-Term Care and Temporary Continuation of Coverage (TCC), are not eligible expenses.

What is the maximum amount I can contribute to an HCFSA?
The maximum amount an FSAFEDS participant can allot to a HCFSA for the 2004 Plan Year is $4,000.

Does a Health Care FSA replace my insurance plan?
No! A Health Care FSA simply pays for your eligible out-of-pocket health care expenses with pre-tax money. First, your claim is generally submitted to your FEHB plan or other insurance carrier to consider your health care, dental, or vision expenses. The remaining out-of-pocket eligible expenses can then be submitted, together with your plan's Explanation of Benefits (EOB), to FSAFEDS for reimbursement from your Health Care FSA. Your co-payments would not require an Explanation of Benefits but would require a detailed receipt(s). If you have out-of-pocket expenses not covered by your plan, or that you do not wish to submit for reimbursement under your FEHB or any other health plan, you will need to submit a detailed receipt.

Can I deduct expenses reimbursed by my Health Care FSA on my tax return as a medical expense?
No, you cannot because you have already received reimbursement with tax-free dollars through your FSA.

Why should I use an FSA for health care expenses rather than deducting the expenses on my income tax return?
Only medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI) can be deducted on your Federal Income Tax form. However, FSAs are tax-free from the first dollar. You do not have to meet the 7.5% AGI minimum before receiving the deduction. Further, money set aside through an FSA is also exempt from FICA (social security) taxes. This exemption is not available on your Federal Income Tax return. However, you may wish to consult with a tax professional to determine which option is best for you.

Will the money I elect for the Health Care FSA be paid directly to my doctor?
No. Payment is made to you.

Based on what I read, it seems that it will always be more advantageous to pay for my health care expenses using the Health Care Flexible Spending Account than by claiming them on Schedule A of my Federal Tax return. Is there ever any reason to prefer the latter method?
Most people will find the HCFSA more advantageous. Federal Schedule A allows for deduction of only those medical expenses that exceed 7.5% of your adjusted gross income. Not only are funds in a Health Care Flexible Spending Account tax-free from the first dollar, but also they are also exempt from FICA (Social Security) taxes, in addition to being exempt from income taxes. However, if your eligible expenses exceed 7.5% of your adjusted gross income by a significant amount, you may want to consult with a tax professional to determine what method is better for you.

Can I elect to use dollars in my HCFSA for premiums for other insurance policies such as Long-Term Care Insurance, TCC, or group retiree policies (from a previous employer)?
No. The Internal Revenue Code (which governs how all flexible spending arrangements operate) does not permit you to pay insurance premiums from moneys allotted to a HCFSA.

Can I pay insurance premiums for my spouse and my children's separate health plan with my HCFSA?
No. Insurance premiums may not be paid from monies allotted to a HCFSA.

If I didn't use all the money allotted to my HCFSA during the year, can I get the money refunded to me?
No. Under current tax rules, money cannot be carried over from one Plan Year to the next or refunded. You will forfeit any money not claimed by April 30 after the end of the Plan Year. This is the major reason employees need to be conservative in their estimate of how much money to allocate to an FSA.

Are there limitations that apply to HCFSAs on an aggregate basis?
Unlike DCFSAs, there is no maximum HCFSA allotment specified by law. While the maximum permitted under FSAFEDS is $4,000 per covered employee, you or your spouse may have another FSA available through another employer plan or FSAFEDS. Thus, the aggregate HCFSA allotments for a working couple may exceed the $4,000 FSAFEDS maximum per individual employee.

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Leave Without Pay (LWOP), Retirement or Separation from Service  |  Print Leave Without Pay (LWOP)

What happens to my HCFSA/DCFSA when I am placed in a LWOP status?
If you go on a period of Leave Without Pay (LWOP), your agency will not contribute your allotments during your LWOP period. If you have not pre-paid your allotment, your HCFSA account will be frozen and you will not be eligible for reimbursement of any HCFSA expenses incurred during that period until the Plan Year ends or until you return to pay status and begin making allotments again. You may continue to submit claims for eligible health care expenses incurred prior to your period of LWOP.

If you have a DCFSA, dependent care expenses you incur during your leave that meet IRS guidelines for eligible expenses. (i.e., you must incur the expenses in order to allow you and your spouse to work or attend school) may be reimbursed up to your account balance.

When you return to pay status your allotments will increase by 20% of the deductions not taken during your period of leave without pay. If there are less than five pay dates remaining in the year when you return to duty, your deductions will increase proportionately over the number of pay dates remaining in the Plan Year so that your account is paid in full on the last pay date of the year. As long as you make up any missed allotments, any eligible health care expenses incurred during your LWOP can be reimbursed through your HCFSA.

Note: LWOP is not a Qualified Status Change and you will not be permitted to change your election amounts upon return to service.

What happens if I separate or retire before the end of the Plan Year?
The balances in your DCFSA and HCFSA are treated differently if you separate before the end of the Plan Year.

Your HCFSA will terminate as of the date of your separation. There are no extensions. Any health care expenses incurred prior to the date of separation will still be reimbursable but those incurred after the date of separation will not. You can continue to use the remaining balance in your DCFSA to pay for eligible dependent care expenses until the end of the Plan Year or until your account balance is used up, whichever comes first.

Example:

If I separate or retire from service, can I receive the remaining balance in my HCFSA?
No. You can only be reimbursed for the expenses incurred prior to the date of separation/retirement. For example, you separated/retired on October 18, 2003 but received emergency care on October 15. You receive the bills on October 31. Although you are separated, you can submit the bills to be reimbursed for any eligible medical expense. If you incurred these expenses on October 19 or later, you are not eligible for reimbursement even if there is still money in your HCFSA to pay these expenses.

If I separate or retire and return to work for the Federal Government later, can my FSA be reinstated?
Yes. As long as you return to work for a participating Federal Agency within 60 days and before the end of the same tax calendar year, your previous election will be reinstated and you will have access to your account. You will not be permitted to change the amount of your allotment and you will be required to make up any missed allotments. If you return in another Plan Year, you will be given an opportunity to make a new election. EXCEPTION: If there has been a Qualified Status Change within the 60 days, you may modify your election. You cannot enroll on, or after, October 1 of any Plan Year.

If I separate or retire before the end of the year and there is money left in my HCFSA, can I use it to pay for any medical expenses incurred after I separate?
No. To be considered an eligible medical expense, it must be incurred before you separate.

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New Employees  |  Print New Employees

I am a new/newly eligible employee. How long do I have to make an election?
If you are a new or newly eligible employee and you want to participate in FSAFEDS, you have 60 days after your hire date, but no later than October 1 of any Plan Year to make an election to participate in either the HCFSA or DCFSA. These elections will be binding throughout the Plan Year unless you experience a Qualified Status Change. If you are hired on or after October 1 you are ineligible to participate in that Plan Year, but can elect an FSA during the FEHB open season held each fall for the following Plan Year.

As a new employee, if I choose to make an election within the 60 days, how long do I have to change my mind?
Your election is accepted by FSAFEDS as of midnight on the day it is accepted by FSAFEDS (generally, the day you enroll) and no changes can be made after that unless you experience a Qualified Status Change.

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Open Season  |  Print Open Season

Is there an Open Season every year? If so, when is it held?
Open Season for FSAFEDS is always held concurrent with the FEHB Open Season from mid-November to mid-December. Your elections during Open Season are effective for the Plan Year that follows. For example, your elections in the Open Season during November/December of 2004 will be effective for the Plan Year 2005 (January 1 – December 31, 2005).

Can I enroll outside of an Open Season?
You can only enroll outside of an Open Season if you qualify for an absentee or belated enrollment, experience a Qualified Status Change, or are a new or newly eligible employee before October 1 of any Plan Year.

If I change my mind after Open Season ends, can I change my election?
You may not change your election unless you have a Qualified Status Change. After you enroll, a confirmation statement will be Emailed or mailed to you. You may also print it directly from your PC. This statement can be used to ensure that the binding elections you make are the ones you want.

Can I change my mind during Open Season?
Yes, you may change your election and allotment amount as much as you want during the Open Season timeframe from mid-November through mid-December. Your last change at midnight on the day that Open Season ends becomes your final election.

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Paperless Reimbursement  |  Print Paperless Reimbursement

What is Paperless Reimbursement?
FSAFEDS has partnered with a number of FEHB plans to implement paperless reimbursement. To view which plans are currently participating, Click Paperless Reimbursement Quick Reference Guide for more information. This new program eliminates the need for you to complete a FSAFEDS claim form and submit it along with your Explanation of Benefit statements to FSAFEDS. Instead, once your participating FEHB plan processes your medical and/or prescription claims, they will automatically submit your out-of-pocket expense(s) electronically to FSAFEDS for automatic reimbursement for your Health Care Flexible Spending Account (HCFSA). Not only are you saving money with your HCFSA, you are avoiding paperwork as well! If your FEHB Plan is not currently participating, you may provide your email address in the “My Account” section of the web site so that you will be notified when they begin to participate. Click Paperless Reimbursement for more information.

Which FEHB plans participate in Paperless Reimbursement?
Currently there are five participating plans: BlueCross and BlueShield Service Benefit Plan, GEHA, Mail Handlers/First Health, Association Benefit Plan and M.D. IPA. We are in discussions with several other FEHB plans, and will add plans throughout the year and in future years.

How do I sign up for Paperless Reimbursement?
You will be prompted to sign up during the enrollment process. Once you’ve enrolled in FSAFEDS, you can sign up or cancel your participation in Paperless Reimbursement at any time by logging into your account at www.fsafeds.com.

How does Paperless Reimbursement work?
Once your FEHB plan processes your claims (medical, certain dental and/or prescription claims), they will forward your out-of-pocket expense(s) electronically to FSAFEDS for automatic reimbursement to your Health Care Flexible Spending Account (HCFSA). By automatically forwarding these claims, you do not need to manually prepare and submit your claims with out-of-pocket costs from your FEHB Plan to FSAFEDS.

Do I have to do anything?
No action is required to file your FSAFEDS claim. Once your claim has been processed by your FEHB plan, the claim will automatically forward to the FSAFEDS program. Note, however, that you must still file pharmacy claims if you are in GEHA or the Association plan.

Does Paperless Reimbursement speed up the FEHB claims-paying process?
No it does not. The timeline for your FEHB plan to process your claim has not changed. Once your claim has been processed it will automatically be submitted to your FSAFEDS account. Your FEHB plan forwards your retail and mail order pharmacy claims to FSAFEDS for processing from your Health Care Flexible Spending Account. The payment schedule for both the retail and mail order pharmacy vendors is generally longer than what you may experience for your medical and dental claims. This longer payment schedule means that your pharmacy claims will most likely take longer to be reimbursed by FSAFEDS under Paperless Reimbursement.

For most medical and dental expenses, it will take FSAFEDS 10-12 business days to process your claim from the date the expense was incurred. Retail and mail order pharmacy claims may take up to 4-5 weeks to process, from the date the expense was incurred.

Do I still pay my co-pays, deductibles, and other out-of-pocket expenses?
Yes. Paperless Reimbursement does not change in any way your relationship and obligations to your health care providers. You are expected to make payment for your out-of-pocket expenses when requested by your provider. Under paperless reimbursement, FSAFEDS will reimburse you – not your provider. While in many cases you may be reimbursed before you receive a bill from your provider, you may not use paperless reimbursement as a reason for withholding a provider payment when you don’t.

How often does FSAFEDS receive the file of processed claims from my FEHB plan?
FSAFEDS receives a file weekly from each participant plan. The payment schedule for both the retail and mail order pharmacy vendors is generally longer than what you may experience for your medical and dental claims. This longer payment schedule means that your pharmacy claims will most likely take longer to be reimbursed by FSAFEDS under Paperless Reimbursement. Retail and mail order pharmacy claims may take up to 4-5 weeks to process from the date the expense was incurred.

Are my retail and/or mail order pharmacy claims covered under Paperless Reimbursement?
That depends on your FEHB plan.

Plan NameServices/Claims Covered
BCBSMedical, Dental and Pharmacy
GEHAMedical and Dental
Mail Handlers/First HealthMedical, Dental and Pharmacy
Association Benefit PlanMedical Only
M.D.IPAMedical, Dental and Pharmacy

What if my FEHB plan does not participate. How can I get my plan to participate?
You may contact your plan and ask them to consider participating. You can also send us an email at FSAFEDS@shps.net, telling us the name of your plan. We will contact your plan to encourage them to consider participating in the program.

Also, if your FEHB Plan is not currently participating, you may provide your email address in the “My Account” section of the FSAFEDS.com web site so that we can notify you when they begin to participate.

Can I enroll now for Paperless Reimbursement?
Yes, you may enroll – or disenroll – at any time. Simply go to www.fsafeds.com, click on My Account and select auto-reimbursement.

If I’m enrolled in one of the FEHB plans that participate in Paperless Reimbursement, am I automatically enrolled in it?
No. You must make a positive election of Paperless Reimbursement to participate. If your FEHB plan participates, and you want to enroll, click on the My Account section at www.fsafeds.com.

How will my FEHB plan know that my dependents are covered under my health insurance?
You provide your FEHB plan with this information when you enroll, or when there has been a change in your enrollment.

How does my FEHB plan know to submit claims for my dependent to my FSA?
Your FEHB plan submits all claims - for all family members covered under your FEHB plan - to FSAFEDS via the contract holder’s SSN. If you are not the contract holder, you will need to provide that information during enrollment.

What if I submit a claim directly to FSAFEDS?
We strongly encourage you not to submit the same expenses – after all, you signed up for Paperless Reimbursement so you wouldn’t have to fill out claim forms and submit receipts! However, if you do submit a claim that is automatically rolled over from your FEHB plan, the claim would be denied as a duplicate.

Will my plan submit expenses for over-the-counter medicines or products via Paperless Reimbursement?
No. Since non-prescription drugs are not eligible expenses under FEHB coverage, your plan will not process these claims, and there will be no EOB (Explanation of Benefits) information to send to FSAFEDS.

Who do I contact if I have questions concerning Paperless Reimbursement or what's allowed under my HCFSA?
You can download a Paperless Reimbursement Quick Reference Guide, or call the FSAFEDS toll-free number: 1-877-FSAFEDS (372-3337), Monday through Friday between 9 A.M. and 9 P.M. Eastern Time, and a Benefits Counselor will be happy to answer your questions.

Who do I contact if I have questions concerning my FEHB plan coverage, or a question regarding a specific claim?
Here is the contact information for each of the plans currently participating in Paperless Reimbursement:

FEHB PlanCustomer ServicePharmacy Customer Service
Association Benefit PlanTelephone# printed on the back of your identification card 
BCBSTelephone # printed on the back of your identification cardRetail: 800-624-5060
Mail: 800-262-7890
GEHA1-800-821-61361-800-821-6136
Mail Handlers/First Health1-800-410-77781-800-410-7778
M.D. IPA1-800-251-0956
1-800-553-7109 (TTY)		1-800-251-0956
1-800-553-7109 (TTY)

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FAQs are subject to change without notice.
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