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FSA/HSA/HRA Expanded Eligible Expenses

 The CARES Act expanded the list of eligible expenses for retroactive to January 1, 2020.

Over-the-counter drugs/medicines – over-the-counter (OTC) drugs and medicines reinstated as eligible expenses.

Feminine products – the CARES Act also includes expenses for “menstrual care products.” The law specifies these items include tampons, pads, liners, cups, sponges, or similar products used by consumers with respect to menstruation.

For a complete list of eligible expenses, please visit the Discovery Benefits website.

What is a Medical FSA?

A Flexible Spending Account (also known as a flexible spending arrangement) is a special account you put money into that you use to pay for certain out-of-pocket health care costs.

You don’t pay taxes on this money. This means you’ll save an amount equal to the taxes you would have paid on the money you set aside.

Read more about how FSAs work in this IRS publication (PDF).

A few fast facts about FSAs

• Medical FSA contribution limits:

  • 2024 - $3,200 (carryover max. $640)

  • 2025 - $3,300 (carryover max. $660)

  • If you’re married, your spouse can put up to the limit in an FSA with their employer too. 
    
    
• Dependent Care FSA contribution limit: $5,000

  • $5,000 for married filing jointly or head of household and $2,500 for married filing separately.

• You can use funds in your FSA to pay for certain medical and dental expenses for you, your spouse if you’re married, and your dependents.
  • You can spend FSA funds to pay deductibles and copayments, but not for insurance premiums.
  • You can spend FSA funds on prescription medications, as well as over-the-counter medicines with a doctor's prescription. Reimbursements for insulin are allowed without a prescription.
  • FSAs may also be used to cover costs of medical equipment like crutches, supplies like bandages, and diagnostic devices like blood sugar test kits.
  • See a list of generally permitted medical and dental expenses.

FSA limits, grace periods, and carry-overs

You generally must use the money in an FSA within the plan year. You have until the following Valentine's Day to turn in receipts for the plan year. 

Village Carry-Over:

• The maximum carryover for medical FSAs for 2024 is $640. 
• The maximum carryover for medical FSAs for 2025 is $660. 

It's important to plan carefully and not put more money in your FSA than you think you'll spend within a year on things like copayments, coinsurance, drugs, and other allowed health care costs.

The Savings Power of Dependent Care FSA

A Dependent Care FSA (DCFSA) is a pre-tax benefit account used to pay for eligible dependent care services, such as preschool, summer day camp, before or after school programs, and child or adult daycare. It's a smart, simple way to save money while taking care of your loved ones so that you can continue to work.

Why enroll in a Dependent Care FSA?

• Save an average of 30% on dependent care services
• Reduce your overall tax burden - funds are withdrawn from your paycheck for deposit into your account before taxes are deducted
• Take advantage of several convenient, no-hassle payment and reimbursement options

It is important to note that you can access money only after it is placed into your dependent care FSA account. All caregivers must have a tax ID or Social Security number. This information must be included on your federal tax return. If you use the dependent care reimbursement account, the IRS will not allow you to claim a dependent care credit for reimbursed expenses. Consult your tax advisor to determine whether you should enroll in this plan.

•  Dependent Care FSA contributions do not carryover into the next benefit year.

How You Save

With a Dependent Care FSA, you use pre-tax dollars to pay qualified out-of-pocket dependent care expenses. The money you contribute to a Dependent Care FSA is not subject to payroll taxes, so you end up paying less in taxes and taking home more of your paycheck.

Dependent Care FSA Eligible Expenses

• Care for your child who is under age 13
  • Before and after school care
  • Babysitting and nanny expenses
  • Daycare, nursery school, and preschool
  • Summer day camp
• Care for your spouse or a relative who is physically or mentally incapable of self-care and lives in your home.

Discovery Benefits Website:  www.wexinc.com                                   Fax:  866-451-3245

Customer Service:   866-451-3399   Mon - Fri 7:30 am - 7:30 pm