A Flexible Spending Account (FSA) is a special non-taxed account designed to save you money on health care and dependent care expenses. Section 125 of the Internal Revenue Code allows you to pay for your portion of the cost of certain employee benefits before federal income and social security taxes are withheld from your pay. That means you will pay less in taxes and have more spendable income; however, there are certain limitations. Generally, after you make your health insurance coverage decisions, you may not change your mind in the middle of the year unless there is a qualifying change in your family circumstances.
Estimating Your Monthly Deductions
When you enroll, it is important to carefully estimate your eligible expenses for the upcoming year. Review how much you spent for physician, prescription, dental, hospital, copayments etc., over the past year. If you haven't kept track of your expenses, you can log in to your
mycigna.com and review your claims history to provide you with the necessary information. This will help you estimate how much should be deducted from each paycheck.
Remember, even if you don't cover your dependents on your insurance, you may still file their claims on your Health Care FSA as long as you claim them on your federal income tax return as dependents.
IRS Regulations state that any money left in the FSA at the end of the plan year plus a 2-1/2 month grace period is forfeited. Contribution changes are only permitted in the event of a qualified status change.