Key Terms for Flexible Spending Accounts (FSAs)
Here is a glossary of key terms related to Flexible Spending Accounts (FSAs).
Flexible Spending Account Terminology
- Administrator: The point of contact at the company responsible for making decisions and managing the company's Flexible Spending Account offering.
- Claim: Reporting of an eligible service or expense to receive credit and/or reimbursement in conjunction with one's allowed benefit.
- Claim Form: A form that one needs to submit with proof of an expense/service in order for the carrier/provider to process and pay (if applicable).
- Contribution: The amount of money that an employee delegates to be deposited into their Flexible Spending Account and loaded onto their debit card for use.
- Dependent Care FSA: A dedicated Flexible Spending Account for an employee's dependents.
- Eligible Expense: Purchases/services received that are allowed by the benefit provider.
- Employer Contribution: The amount of money that a company decides to contribute to employees' Flexible Spending Accounts on top of what the employee decides to contribute on their own.
- Flexible Spending Account (FSA): An account that is comprised of pre-tax funds for use for medical expenses and other spending.
- Grace Period: An optional timeframe during which an employee can spend down before the funds are no longer available for them to use. The grace period is 2.5 months and employees will have until the end of the grace period to use their funds from the previous plan year.
- IRS Maximum: The maximum allowable amount regulated by the IRS that can be withheld from an employee's pay pre-tax. This maximum changes from year to year, and employees are allowed to contribute beyond the IRS max -- except any funds beyond the max are taxed like regular pay.
- Medical FSA: A Flexible Spending Account for the employee to use for their own medical expenses. These funds are for their expenses and not those of their dependents (see: Dependent Care FSA).
- Post-tax: Funds that are taxed on an employee's pay normally.
- Pre-load: The amount of funds that are available on the first day the plan. The full amount is available even if the employee has only contributed a portion of the total annual amount.
- Pre-tax: Funds that are removed from the gross pay of an employee's paycheck prior to taxation.
- Qualifying Life Event (QLE): An event that allows an employee to make additions or changes to their FSA enrollments, elections, and dependent elections. Commonly marriage, birth of a child, significant employment changes, etc.
- Reimbursement: The return of funds overpaid for a service/item, as designated by the plan's benefit structure.
- Rollover: An optional carry-over of accrued funds into the next plan year. Maximum $500.
- Run-out Period: The 90-day period following the end of an FSA plan during which an enrollee can submit claims for eligible expenses incurred during the plan year.
- Use It Or Lose It: The term used for FSAs, as funds that were left unused in the prior plan year will expire and cannot be returned to the employee (outside of the Grace Period, if applicable).
- Window Period: The enrollment window during which employees elect or make changes to their FSA contribution(s).
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