Choose one of the following topics of questions:
Care Spending Account
Medical Reimbursement Spending Account
If you have a question you would like answered or would like to see added to our compilation, please feel free to e-mail us at firstname.lastname@example.org.
I paid my child's after school care in one lump sum in August. The lump sum payment covered the entire school year — September through May. The school gave me one receipt that covered the entire period. Do I have to ask the school for monthly receipts in order to claim for dependent care reimbursement every month?
Answer: No. You may make copies of the one receipt and turn in a copy monthly with a completed claim form.
I paid my child's summer day care in one lump sum in May. The lump sum payment covered the summer day care for the months of June and July. The day care provider gave me one receipt that covered June and July. Because the receipt covers two different plan years, do I have to ask the day care provider for two receipts?
Answer: No. You may make copies of the one receipt and turn in a copy each month. But, because the period covers two plan years, be sure to turn in two claim forms, one for June and one for July. Also, remember that you must enroll again during the open enrollment period in Spring to claim for the July expense.
I send my child to preschool and pay the bill monthly. The bill itemizes the tuition, meals, and other expenses, such as T-shirts. Are the meals and T-shirts considered an allowable dependent care expense?
Answer: If your receipt/bill itemizes tuition, meals, and other expenses, such as T-shirts, the only allowable expense is the tuition. However, if the meals and other expenses are not itemized and are shown only as one lump sum charge, then the entire lump sum charge is an allowable dependent care expense.
I send my 10-year-old child to Kumon School on Monday, Wednesday, and Friday from 3:00 p.m. to 5:00 p.m. and to Japanese School on Tuesday and Thursday from 3:00 p.m. to 5:00 p.m. during the school year and to summer school during the summer. Are these programs eligible dependent care expenses?
Answer: Since Kumon School and Japanese School are not primarily providing child care, but are providing more educational type activities, they would not be considered an eligible dependent care expense. If summer school provides primarily educational activities, instead of primarily child care, it would not be an eligible expense.
In order for an expense to be considered an eligible dependent care expense, the services provided should be primarily custodial or child care in nature as opposed to primarily educational in nature. If you are not sure if the services are primarily child care or educational, ask the service provider what they consider themselves to be. Note: this is a corrected answer from a previous posting.
I read that contact lenses are considered an eligible expense for the Medical FSA. Are the cleaning solutions, such as the saline and disinfectant solutions, also considered eligible expenses?
I have a 19-year-old child who attends college and lives in the dormitory. Can I consider her a dependent for the Medical Spending Account and turn in receipts for her unreimbursed medical expenses?
Answer: As long as you claim her as a dependent on your federal tax return, then you can consider her a dependent for purposes of the Medical Spending Account.
My medical, dental, drug and vision insurance plans do not reimburse me for the 4% excise tax that is charged when I go to the doctor or hospital. Is the 4% excise tax an allowable expense for my Medical Spending Account?
Are the following services considered eligible expenses for my Medical Spending Account — acupuncture, chiropractor, and shiatsu?
Answer: Acupuncture and chiropractic services are eligible expenses if they are to treat a medical condition. The provider needs to be licensed and provide a receipt. Shiatsu is an eligible expense if prescribed by a physician to treat a medical condition.
I go to a naturopathic doctor. Are her services considered an eligible expense for my Medical Spending Account? Are natural medicines she advises me to take considered an eligible expense?
Answer: Since the IRS has not taken a definitive position on naturopathy, office visits for the naturopath are eligible, however, naturopathic-type remedies, such as herbs, are non-eligible services.
My child will be getting braces to correct a bite problem. The services start in July 2000 and will end after 24 months and will cost $4,000. The dentist said there are 3 ways I can pay: 1) one lump sum payment the month before services start; 2) pay an initial lump sum and then equal monthly installments during the 24-month contract; or 3) equal monthly installments throughout the 24 months. Please explain how each would work regarding my Medical FSA reimbursement.
Answer: For each plan year, the first claim for orthodontic expenses need to be submited with a copy of the contract. The contract needs to include 1) the beginning date of service (banding date) 2) the "approximate" length of service/treatment period 3) total cost of service, inclusive of discounts 4) record fee/x-ray fees 5) initial fee (down payment) & date paid 6) payment amount & due date 7) total insurance coverage (if applicable). Orthodontics is an ongoing treatment and the IRS prohigits pre-payment of these services. For payment schedules that do not coincide with dates of service, please contact Comprehensive Financial Planning, Inc. or download the "Guidelines for Orthodontia Reimbursement" handout.
My employment is scheduled to end December 31st, which would make me eligible to participate in the Island Flex program for only 6 months. Can I put in the full $5,000 in my Dependent Care FSA and the full $2,400 in my Medical FSA even though I'll only be participating for 6 months?
Yes. Instead of spreading the $5,000 and $2,400 over 24 pay periods, it will be spread over 12 pay periods.
However, the $5,000 maximum for Dependent care is an IRS limit for the calendar year. If you had participated in the prior January to June (last six months of prior plan year), your $5,000 for the calendar year will include the contributions made prior to July.
I participate in both the Medical FSA and Dependent Care FSA. What if I have a $10 receipt for dependent care and a $5 receipt for medical expenses? Can I combine the two receipts, even though one is for the Medical FSA and one is for the Dependent Care FSA? Or, do I have to accumulate $25worth of medical receipts and $25worth of dependent care receipts?
Answer: The minimum claim
amount must meet $25 per account in order for your claim to be
processed. If you have less than a $25 balance for the remainder of the
plan year, then a smaller amount can be submitted.
You mentioned that employees have 90 days to notify the administrator in writing of a status change in order to make a payroll deduction change. Do I just write a letter to the administrator? Besides marriage, divorce, death, and birth of a child, are there any other events that are considered status changes?
1. You should complete a "Change Form" and mail it to the administrator within 90 days of your status change to notify the administrator of your status change, or to change your name or address. You may get a Change Form by calling the administrator.
2. Allowable status change
(a) A change in legal marital status, including marriage, death of spouse, divorce, legal separation or annulment.
(b) A change in number of dependents, including birth, adoption, placement for adoption, or death of a dependent.
(c) A change in employment status, including termination or commencement of employment of the employee, spouse, or dependent.
(d) A change in work schedule, including an increase or decrease in the number of hours of employment by the employee, spouse or dependent, including a switch between full-time and part-time status, a strike or lockout, or a commencement or return from an unpaid leave of absence.
(e) The dependent satisfies or ceases to satisfy the requirements for unmarried dependents.
(f) The dependent ceases to satisfy the definition of "qualifying individual" under section 21(b)(1) of the Code for purposes of dependent care.
(g) A significant cost increase by the dependent care provider (as long as the dependent care provider is not related to the employee), a significant decrease in cost, or a change in dependent care providers.
Also, any payroll deduction
increase/ decrease/ cancellation due to an approved status change
must be consistent with the status change and may only
be on a prospective basis.
Also, any payroll deduction increase/ decrease/ cancellation due to an approved status change must be consistent with the status change and may only be on a prospective basis.