Use pre-tax dollars to pay for your everyday expenses

A Flexible Spending Account (FSA) offers a smart, convenient way to set aside money tax free to cover the everyday expenses you know your family will have in the coming year.  You can use it to pay for certain medical, childcare, dependent adult care, dental and vision expenses.

Using pre-tax dollars increases your spendable income

Because your contributions to an FSA are made before taxes are deducted from your pay, you reduce your total taxable income and get to keep more of every dollar you earn. Your employer may offer you one or a combination of our FSA options:

• Health Care FSA (for your qualified medical, dental and vision expenses) – Ask your employer to find out if there is a minimum or maximum amount you can contribute
• Dependent Care FSA (for your qualified child and/or adult dependent are expenses) – The IRS allows you to contribute up to $5,000 annually per family ($2,500 for married couples who file separate tax returns). Ask your employer if there is a minimum you can contribute.
• Limited-Purpose FSA (for your qualified dental and vision expenses) – The IRS allows employers that offer a High-Deductible Health Plan (HDHP) and Health Savings Account (HSA) to also offer a Limited-Purpose FSA.  It works the same way as the Health Care FSA does: pre-tax, "use it or lose it" elections, and expenses must occur with in the plan year.  The difference is that you can only submit claims for eligible dental and vision expenses.

How FSAs work…and how you save

Using an FSA is simple.

• Decide how much money you want to set aside to cover your health care and/or dependent care expenses for the coming year.
• Have your employer withhold an equal portion of that amount from each paycheck, deducting it from your earnings on a pre-tax basis.
• Use your FSA funds throughout the year to pay for qualified health care or dependent care expenses.
• Make sure your FSA funds are used by the end of the year to avoid forfeiting any money.

Using pre-tax dollars to fund your FSA reduces your federal income tax, your FICA tax, and if applicable, your state income tax – giving you more spendable income, as well.

Accessing your FSA funds

If your Health Care or Limited-Purpose FSA includes automatic reimbursement, determined by your employer, you just pay upfront for health care services and receive an automated reimbursement check from your FSA.  You can choose to turn off automatic reimbursement and file claims manually.

Or, if your Health Care or Limited-Purpose FSA plan includes a debit card, determined by your employer, you can use the card to pay upfront whenever qualified medical services are received, as long as you have FSA funds available.

Another option is manual submission where you pay upfront and then submit claim forms and receipts for reimbursement, using the Flexible Spending Account claim forms. For the Dependent Care FSA, you are required to manually submit claims by simply keeping receipts and then filing a claim form for reimbursement.

If you have specific questions about your FSA from BlueCross BlueShield of Tennessee, your Consumer Coach is ready to help. Just call 1-800-527-9206 or e-mail ConsumerCoach@BCBST.com for assistance.