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What is fsa insurance

what is fsa insurance

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All expenses must be qualified medical, vision, pharmacy or dental benefit expenses, as defined in Section 213(d) of the Internal Revenue Code.

Effective January 1, 2011 over-the-counter medicines will not be FSA-eligible without a doctor's prescription as a result of Health Care Reform.

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Generally, contributions you make to your FSA are not subject to federal income taxes or social security taxes. In most instances, there are no state taxes taken out either. The amount you may save depends upon:

The amount you put into your FSA

The tax percentage you would normally pay on that money (tax bracket)

Let's say you want $2,000 taken out of your paycheck this year to put into your FSA. The money you direct to your FSA is taken out of your check before taxes are taken out. That reduces your taxable income by $2,000.

Let's say you normally pay 30 percent in federal, social security and state taxes on your income. In this example, you would enjoy a tax savings of 30 percent of the $2,000. In other words, you could get a $600 tax savings on the $2,000 you directed to your FSA.

This example should not be taken as tax advice. See a tax advisor to seek the best advice for your situation. To see how much you may save, check out our FSA Savings Calculator .

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Ready to decide the amount you want in your FSA? It's good to plan ahead.

Consider the medical, vision or pharmacy costs not covered by a health plan. Need dental work? How

about contact lenses? Buy cold medicine, aspirin and sunscreen throughout the year? Your FSA may help pay for these items and more.

Also look at family changes that might have an impact on your expenses.

Due to Health Care Reform the IRS now limits the amount you can put into a health care FSA. The IRS limitation for FSA contributions is $2,550 per employee. Your employer may also set a minimum amount you can contribute. Review your enrollment materials to learn the minimum and maximum amounts you can set aside in your account.

Just remember this. FSA dollars are "use-it-or-lose-it" funds. Account balances cannot be carried over from year to year. If you have any unused funds at the end of the plan year, or at the end of any applicable grace period, those funds will be forfeited. That's an IRS requirement. So estimate what you want to direct to your FSA carefully.

For help deciding how much to contribute, check out the FSA Savings Calculator .

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Getting reimbursed is easy. We offer several automatic reimbursement options. There is no need to fill out a paper claim form. Please ask your plan sponsor which automatic options are available to you. We reimburse eligible health care expenses up to the full amount of your annual FSA contribution, minus any amount already reimbursed.

Please refer to your employer's Summary Plan Description to determine if this is an available benefit under your employer's plan. In case of a conflict between your plan documents and the information in this website, the plan documents will govern.

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Category: Insurance

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