Benefits Summaries & Orientation

Flexible Spending Account

Grand Valley State University Flexible Spending Accounts

Under the Personalized Benefits Program, you may take advantage of GVSU's Flexible Spending Accounts (FSA). The Flexible Spending Account(s) option makes your earnings go further by allowing you to set aside pre-tax earnings to pay for eligible health and dependent care expenses. Your pre-tax dollars are deposited to your Flexible Spending Account(s) and are not considered taxable income. This saves you from paying Social Security, federal, state, or local income taxes on that portion of your income. Flexible Spending Accounts should be used for predictable expenses, since the Internal Revenue Service mandates that funds remaining in your account(s) at the end of the calendar year cannot be returned to you.

The following example shows how Flexible Spending Accounts (FSA) can increase your spendable income.
.
With FSA
Without FSA
Earned Income
$25,000
$25,000
FSA Contribution
$2,000
$0
Taxable Income
$23,000
$25,000
Less: Federal Tax
$1,403
$1,830
Michigan Tax
$672
$874
Grand Rapids Tax
$200
$250
Social Security Tax
$1,760
$1,878
After Tax Income
$18,965
$20,168
Medical Care Expenses
$2,000
$2,000
Spendable Income
Before Reimbursement
$16,965
$18,168
FSA Reimbursement
$2,000
$0
Spendable Income
$18,965
$18,168
Increase in Spendable Pay
$797
..

 

The following example shows how tax savings might be more from a Dependent Care Flexible Spending Account than from using the federal child care tax credit.
.
Tax Credit
FSA
Earned Income
$25,000
$25,000
FSA Contribution
$0
$4,800
Taxable Income
$25,000
$20,200
Effective Tax Rate*
27%
27%
Taxes
$6,750
$5,454
After Tax Income
$18,250
$14,746
Child Care Payments
$4,800
$4,800
Spendable Income
Before Reimbursement
$13,450
$9,946
FSA Reimbursement
$0
$4,800
Federal Child Care Tax Credit
$600
$0
Spendable Income
$14,050
$14,746
Increase in Spendable Pay
.
$696
* Includes Social Security, federal, and state taxes for a married couple


How the Flexible Spending Accounts Option Works
The Flexible Spending Accounts option includes two types of accounts-health care and/or dependent care. You may select one or both of them.

Health Care Accounts

The maximum annual amount you may deposit in your Flexible Health Care Spending Account is $2,500.

Any item allowed as a medical deduction on your income tax return is eligible for reimbursement under the Flexible Health Care Spending Account as long as you do not also deduct those expenses on your income tax return.

Get examples of eligible/non-eligible expenses.Get a worksheet to assist you in determining the amount you elect for your Health Care Account.

Dependent Care Accounts

Your Dependent Care Flexible Spending Account may be used to pay for certain expenses connected with taking care of your eligible dependents, as defined by the Internal Revenue Service for tax purposes, provided the care is necessary for you and your spouse to work. Working couples as well as single persons may use the account for any of the following dependent care expenses, as long as they are incurred during working hours:

  • Nursery schools or pre-schools used in place of day care.
  • Licensed day care centers.
  • Private baby-sitters, either in their home or your home.
  • Custodial care for dependent adults.

You cannot be reimbursed for dependent care payments you make to your spouse, to your child who is under the age of 19, or to any person you claim as a dependent on your income tax return. You are responsible for obtaining the taxpayer ID number of the care provider. This number is necessary to validate costs in the event of an audit.

There are two important limitations on the amount you may deposit for dependent care expenses. If you are married, your dependent care reimbursements cannot exceed the earned income of the lower-paid spouse, unless the spouse is a full-time student or is disabled. Also, you are limited in the amount you may deposit to your dependent care account to $5,000 annually.

In some circumstances you may realize greater tax savings if you use the federal child care tax credit instead of the Flexible Spending Account. Generally, persons with family incomes of $24,000 or more each year benefit more from using a Flexible Spending Account. However, GVSU cannot provide you with tax advice. You should seek the guidance of a professional tax consultant.

Careful Planning Maximizes FSA Benefits

You should carefully determine how much you want to set aside for the coming year for these expenses, because Internal Revenue Service rules mandate that any funds left in your account 120 days after the end of the plan year must be forfeited. Dates of service for eligible claims must be for the calendar year of the FSA election. You are limited in the amount that you may deposit to your dependent care account to $5,000 annually. Your annual health care limit is $10,000.

Your Flexible Spending Account(s) should be used only for predictable expenses that you know you will incur, because the Internal Revenue Service has made strict rulings governing the use of your account.

  • You may submit requests for reimbursement for expenses incurred in the calendar year up to 120 days after the end of the plan year. All requests must be received by the last business day in April.
  • The FSA cannot make advance reimbursements of future or projected expenses.
  • Funds may not be withdrawn from the account for any reason other than the reimbursement of eligible expenses, even if you separate from the University. If you leave Grand Valley before the end of the plan year (December 31), you may continue to request reimbursement for eligible expenses incurred before the date of your termination. You may also continue this benefit through COBRA.

Change in Family Status

Once you have enrolled and specified the amount to be deposited to your Flexible Spending Account(s) from each paycheck, you cannot change or stop it unless you have a significant change in family status. This is also true if you have enrolled in a specific medical or dental plan: the plan you select will remain in effect until December 31 unless you have a major change in family status. Such changes include the following:

  • Marriage or divorce.
  • Birth or adoption of a child.
  • Death of a spouse or dependent.
  • Change in employment, such as your or your spouse's layoff, job termination, change from full- to part-time status, taking an unpaid leave of absence, or a significant change in your spouse's health coverage.
  • Dependents over age 26 and under age 27 must be enrolled as a full-time student and actively participate in those courses.

You must notify Human Resources within 30 days of any of the above events to be eligible to make any changes in your coverage.

Each year during the re-enrollment period, you should review any changes made in the medical plans (they are subject to change on an annual basis). Modifications, if any, may prompt you to select another medical plan.

Requesting Reimbursements From Your Account

To receive reimbursements for health care expenses, you must submit the expenses to the appropriate insurance carriers before being reimbursed through your Flexible Spending Account. Simply present a copy of the explanation of benefits or receipt received for a medical, dental or vision claim along with a Request for Reimbursement Form.

To receive reimbursement for dependent care expenses, you must submit a Childcare Provider Invoice and a Request for Reimbursement Form. You may request these forms by printing them from the Health and Wellness web site at www.gvsu.edu/healthwellness.  Reimbursement claims can be uploaded to Infinisource directly if you have created an online account or requests can also be mailed to: 15 E. Washington St. PO Box 488 Coldwater, MI 49036-0488 or faxed to 800.379.5670 or emailed to  fsa@infinisource.com

If you mail your claim, do mot fax it. Allow two business days before checking the website or calling for the status of faxed claims. 

Issues to Consider
One way to plan your deduction to your Flexible Spending Account(s) is to estimate expenses for next year based on a comparison of the expenses for last year. A Flexible Spending Account Worksheet has been provided to assist you in your comparison.

Listed below are some questions to consider when making your decision regarding your Flexible Spending Account(s). 

  • Do you expect the overall health of you and your family members to be the same as it was last year?
  • Did you have any large bills last year, such as surgery or pregnancy, that are not likely to recur next year?
  • What are the deductibles and co-payments for the benefit plan you are considering? You may wish to pay for those expenses on a pre-tax basis using your Health Care Flexible Spending Account.
  • Is your child entering school next year? If so, your dependent care costs could decrease from previous years.
  • Can you think of any other reason you might expect higher or lower medical or dependent care expenses this year?
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