Flexible Spending Account
The FSA plan year is from July 1 through June 30.
GDS offers its employees the opportunity to save tax dollars through a Flexible Spending Account (FSA) administered by P&A Group.
The Flexible Spending Account can be used for Healthcare and Dependent Care reimbursement. You have the option to set aside funds for each pay period, on a pre-tax basis, which can be used for reimbursement of qualified expenses. The FSA plans require re-enrollment each year.
GDS offers two types of Flexible Spending Accounts:
- Healthcare FSA
- Dependent Care FSA
HEALTHCARE FSA
The Healthcare FSA allows you to set aside pre-tax earnings to pay eligible healthcare expenses for the plan year. By having your estimated expenses deducted from your paycheck before taxes are taken out, you can save money on the taxes you pay.
HOW DOES IT WORK?
You decide how much money you want to set aside for healthcare expenses for the coming plan year. GDS Associates will withhold an equal portion of that amount from each paycheck, deducting it from your earnings on a pre-tax basis. Throughout the plan year, you can pay for qualified out-of-pocket expenses using your FSA debit card or submit a claim form for reimbursement.
WHAT KINDS OF EXPENSES QUALIFY?
Expenses must be medically necessary. You can get reimbursed for items such as:
- Deductibles under health plans
- Copayments
- Coinsurance
- Dental Expenses
- Vision care and related hardware
- Prescription drugs
- Durable medical equipment
- Some over the counter medications
- Menstrual products
HOW MUCH SHOULD YOU CONTRIBUTE TO THE HEALTHCARE FSA?
Review provider bills, tax receipts, checkbook register, and other records for the past two years to estimate your healthcare expenses.
You may elect to contribute up to $3,200 for the 2024 – 2025 plan year into the Healthcare FSA.
DEPENDENT CARE FSA
The Dependent Care FSA allows you to set aside pre-tax money to pay dependent care expenses for the coming plan year. By having your estimated expenses deducted from your earnings pre-tax, you can save money on the taxes you pay.
HOW DOES IT WORK?
Decide how much money you want to set aside for the coming plan year’s dependent care expenses. GDS Associates will withhold an equal portion of that amount from each paycheck on a pre-tax basis.
Note: In certain situations, a Dependent Care FSA may not work to your advantage. Lower-income families may recognize more tax benefits by not electing to utilize a Dependent Care FSA.
WHAT KINDS OF EXPENSES QUALIFY?
Dependent Care refers to the care of a dependent under age 13 or a mentally or physically disabled dependent of any age. Dependent care must be necessary so that you and your spouse (if applicable) can work. Monthly dependent expenses cannot exceed the income of you or your spouse, whichever is less.
Qualifying expenses include:
- Selected daycare facilities (must be state-licensed)
- Summer day camp
- Eligible housekeeping services
- Adult and senior daycare services (subject to IRS limitations)
- Before-school and after-school care
HOW MUCH SHOULD YOU CONTRIBUTE TO THE DEPENDENT CARE FSA?
Review all bills, expense vouchers, tax receipts, checkbook register, and other records for the past two years. With this guide, estimate the expenses you may incur for the coming plan year.
You may elect up to $5,000 per year based on current IRS regulations, or $2,500 for married couples filing separately. In certain instances, employees who may be considered highly compensated may be limited to $2,000 per year to be in compliance with IRS regulations.
Use it or Lose it
THERE ARE SPECIAL RULES THAT APPLY TO THE FSA PLANS
In return for tax-saving advantages, the federal government has certain restrictions on FSA Plans:
- Plan Carefully. Any funds left over at the end of the plan year will be forfeited, however, If you have a Flexible Spending Account on the last day of a Plan Year and still have money credited to the Account after all of your claims for expenses during the Plan Year have been processed, the left over money may be used to reimburse you for any eligible medical expenses that you have during the first 2 ½ months of the following Plan Year. This is called a Grace Period. Funds left at the end of the 2 ½ month Grace Period will be forfeited. Any funds left over at the end of the year will be forfeited.
- Healthcare and Dependent Care FSA plans are separate – dollars you put into one account cannot be transferred to another.
- Save your receipts. You should save all of your receipts in case you need to verify a purchase or if you were to ever be audited by the IRS.
- You can only change the amount of your contribution if you have a qualifying event or family status change, such as:
- Marriage
- Divorce or legal separation
- Change of employment by spouse
- Birth or adoption of a child
- Death of a child or spouse
- Change in daycare provider (applies to Dependent Care FSA only)
- Change in cost of daycare (applies to Dependent Care FSA only)
The change you make to your FSA must be consistent with the qualifying event that occurred.
