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How Does an FSA Work?

You decide how much you will set aside in your Flexible Spending Account for the year. You can set aside a portion of your NazFlex benefit allowance and/or you can deposit a portion of your pay before taxes. If you choose to deposit a portion of your pay in one or both accounts, the annual amount you specify for each account will be divided by the number of pay periods in the year, deducted from your paycheck on a pre-tax basis and deposited automatically into your FSA account.

You will be issued a reusable Flexible Spending Account debit card. There is a $4 monthly service fee for this feature. Nazareth pays $2 of this fee and the employee pays the remaining $2. When you pay for an expense covered by one of your accounts, simply swipe your debit card just as you would a credit card. Although using the FSA debit card eliminates up front expenses, submitting a paper claim and waiting for reimbursement, the IRS may require substantiation that the transaction qualifies for an eligible expense. Therefore, keep your receipts to document the transaction.

If a vendor does not accept the FSA debit card, you can file a paper claim with appropriate proof of your incurred expense. Your paper claim will be processed, and you will be reimbursed, up to the maximum amount you elected to set aside in the account. Paper claims for Health Care and Dependent Care expenses are reimbursed from your accounts and are processed semi-monthly.

Flexible Spending Account claim forms are available on the Excellus website and from the Human Resources Department. You can include up to ten health and/or dependent care expenses on each claim form, but you must enclose a copy of the bill or similar proof for each expense. Health expenses that are eligible for partial reimbursement through your medical or dental insurance plans must be accompanied by an Explanation of Benefits Statement, showing how much the insurance plan paid. The balance that was not paid by the health insurance plan can then be reimbursed through your FSA Health Care Account.

Budget your Flexible Spending Account carefully. Under Federal law, you must forfeit any unused balance. Any unused balance at the end of the plan year will be held until April 15 of the following year; that way if you receive a late bill for services incurred in the plan year, you will be able to submit a paper claim prior to April 15 and still be reimbursed. After the April 15 grace period, any remaining Flexible Spending Account balances will be forfeited. This is sometimes referred to as the "use it or lose it" rule.

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