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FSA Employee Guide

FSA Employee Guide - Departments & Programs, UW Health, Benefits, UW Health Open Enrollment, UWMF Open Enrollment, Flexible Spending Account (FSA), Resources

Revised 07/05/17

Give yourself a pay raise.
Use flexible benefits to bring home more of your paycheck.
Who couldn’t use a little more money? That’s what you’ll receive when you take
advantage of a Flexible Spending Account (FSA).
An FSA allows you to set aside a portion of your salary, before taxes, to pay for
qualified medical or dependent care expenses. Because that portion of your income is
not taxed, you end up with more money in your pocket.
Follow these three steps and start making plans for that extra money you’ll bring home.
Three simple steps to a successful FSA:
Plan — how much money you want to set aside.
Spend — on qualifying medical and dependent care expenses.
Collect — the money you’ve set aside.
Get started today. It’s a great perk from
your employer, and it’ll save you money.

Two ways to save money.
Use a Flexible Spending Account to set aside money for medical and/or dependent care expenses.
With an FSA Without an FSA
Gross monthly salary $7,500 $7,500
Health FSA contribution $208 $0
DCA contribution $416 $0
Taxable income $6,876 $7,500
Taxes $2,407 $2,625
Net pay $4,469 $4,875
Post tax medical expenses $0 $208
Post tax dependent care expenses $0 $416
Monthly Income $4,469 $4,251
The Smiths saved $218/month or $2,616/year!
Meet the Smiths
Mom and dad both work outside the home. One child attends school; the other goes to a home day care. Together they make
$7,500 per month and claim four exemptions on their income taxes. Look at their take-home pay:
1. Health FSA — Set aside money to pay expenses not covered by your medical insurance. There are two types of accounts:
• If you have traditional medical insurance, you’ll use
a regular Health FSA for things like coinsurance,
copays, prescriptions, medical deductibles and medical
• If you have a High-Deductible Health Plan (HDHP)
along with a Health Savings Account (HSA), you’ll use a
Limited Health FSA to pay for dental, vision and medical
preventive care until your annual deductible is met.
(See your Summary Plan Description for details.)
2. Dependent Care Account (DCA) — Set aside money for dependent care for children up to age 13, a disabled
dependent of any age or a disabled spouse. To be eligible for this type of account, both you and your spouse
(if applicable) must work, be looking for work or be full-time students.
Tax considerations for your family.
Determine whether you benefit more from a DCA or by taking the dependent care tax credit.
• The DCA contribution maximum is $5,000/year.
• The tax credit limit for one child is $3,000/year. The
limit for two or more children is $6,000/year.
• If you have one dependent and spend more than
$3,000 in day care expenses, you’ll benefit from the
• If you have two or more dependents and spend more
than the $6,000 in day care expenses, you’ll benefit
more by putting $5,000 into the DCA and applying the
remaining $1,000 to the tax credit.
Generally, if your family’s adjusted gross income is less than $39,000 a year, it’s best for you to take the tax credit rather
than participating in the DCA.

Step One:
Use the worksheets on the next page to estimate
your spending.
Each year during your company’s
open enrollment period, you’ll have the
opportunity to enroll or change your FSA
contributions. Being prepared will help
you realize the greatest savings.
Things to consider as you plan:
• Plan your estimate ahead of time.
The IRS has a “Use or Lose” rule,
which states that you lose any
lef�over balance in your account at
the end of the plan year.
• Your employer may o�er a grace
period to give you more time to
use your remaining balance. Refer
to your plan’s Summary Plan
Description (SPD) to learn more.
• The maximum contribution amount
for your Health FSA is determined by
the IRS and your employer. Ask your
employer to make sure you’re within
the limits of your program.
• Final filing dates may be subject to

Dependent Care
Account Worksheet
Keep these things in mind:
• $5,000 annual maximum per household .
• Record expenses for dependent children under
age 13 who you claim on your taxes, or a disabled
spouse or dependent of any age.
• To qualify, you and your spouse must be
employed, or your spouse must be a full-time
student or looking for work.
• Plan ahead. If you don’t use the money in your
account within the plan year, you lose it.
• Once the plan year has started, you cannot change
your election unless there is an IRS-approved
status change event.
January $ _____________
February $ _____________
March $ _____________
April $ _____________
May $ _____________
June $ _____________
July $ _____________
August $ _____________
September $ _____________
October $ _____________
November $ _____________
December $ _____________
Total: Amount to set aside $
Divide by # of paychecks/year $
Health FSA Worksheet
Keep these things in mind:
• Use the money in this account to pay for the
diagnosis, cure, prevention or treatment of a
• Expenses cannot be reimbursed by insurance or
any other source.
• Plan ahead. If you don’t use the money in your
account within the plan year, you could potentially
lose it.
• You cannot change, midyear, the amount you
set aside unless there is an IRS-approved status
change event.
• For a Limited Health FSA, only record expenses
for vision, dental and preventive care. (You can
use your HSA for other eligible medical expenses,
if o�ered by your employer.)

Insurance deductibles $ _____________
Co-pays/coinsurance $ _____________
Exams $ _____________
Prescription drugs $ _____________
Diabetic supplies $ _____________
Chiropractic $ _____________
*Over-the-counter medicines $ _____________
Hearing exams $ _____________
Hearing aid $ _____________
Hearing aid battery $ _____________
Dental fillings, bridges, crowns $ _____________
Dentures $ _____________
Orthodontia $ _____________
Vision exams $ _____________
Glasses (lenses and frames) $ _____________
Contact lenses $ _____________
Contact lens solution $ _____________
Corrective eye surgery $ _____________

Total: Amount to set aside $
Divide by # of paychecks/year $
FSA: Over-the-Counter (OTC) Purchases
As a result of Health Care Reform, the IRS will require a prescription for OTC medication to be eligible for reimbursement.
Go to www.DiscoveryBenefits.com for other reform updates.

Step Two: Spend
Use the money you’ve set aside throughout the plan year.
Laboratory fees
Learning disability treatment
Medical services
Nursing services
Operations (non-cosmetic)
Osteopathic physician appointments
Over-the-counter medications**
Prescription drugs
Psychiatric care
Psychologist visits
Telephone for hearing impaired
Television for hearing impaired
Transplants (organ)
Weight loss programs** (not food)
**These expenses may require documentation
of medical necessity.
Alcoholism treatment
Artificial limbs
Artificial teeth
Birth control
Braille books and magazines
Special car hand controls/special car
equipment for a disability
Chiropractor’s fees
Christian Science practitioners’ fees
Contact lenses
Contact lens solution
Dental fees (not cosmetic)
Diagnostic fees
Drug addiction treatment
Eye exams
Guide dog
Health club membership dues**
Health institute
Hearing aids
Hearing aid batteries
Hospital services
Medical expenses — a list of items typically
Babysitting and childcare
Bleaching teeth (cosmetic)
Cosmetic surgery
Dancing lessons
Diaper service
Face lif�s
Feminine hygiene products
Funeral expenses
Hair transplants
Household help
Illegal operations or treatments
Insurance premiums
Marijuana (even if used medically)
Maternity clothes
Prescription drugs considered cosmetic
Swimming lessons
Any expense not considered
“medically necessary” by IRS
Expenses for general health,
even if doctor-prescribed
Keep this in mind:
• The date of your medical service — not the billing
date — determines the plan year from which the
expense can be reimbursed. Ask your Human Resources
department for the start and end dates of your plan year.
• Your full annual election amount for the Health FSA is
available at any time during the plan year, regardless of
how much you’ve actually contributed to date. In other
words, it’s a prefunded account.
Medical expenses — a list of items typically eligible*

Dependent care expenses —
what’s eligible:
• Care for children under age 13
who are claimed as qualifying
• Disabled spouse or dependent
of any age
Dependent care expenses —
what’s not eligible:
• Costs already claimed as a
dependent care tax credit on your
tax return
• Nursing home, respite care or other
residential care centers
• Services provided by one of
your dependents
• Expenses while on vacation
Keep this in mind:
• The IRS allows changes to your
dependent care account throughout
the plan year:
• If you change day care providers
• If your child turns age 13
• If the cost of qualified day care
expenses increases or decreases
• If you submit receipts totaling
more than you’ve contributed to
your account, you’ll be reimbursed
up to what has been contributed
to your account. The remainder
will be issued automatically as the
funds become available.
Choose the way you pay for eligible expenses.
Pay up-front and get reimbursed.
• Pay for services and products.
• Submit reimbursement request with proof of purchase information showing
date and type of service (also called substantiation).
• Have your funds automatically deposited into your checking or savings
account, or receive a check.
Pay eligible expenses with your Discovery Benefits debit card.
• Use your Discovery Benefits debit card to pay for eligible services
and products.
• Payments are automatically withdrawn from your FSA, so you don’t
incur out-of-pocket costs.
• Discovery Benefits debit card purchases need to be verified to satisfy
IRS requirements. Some merchants can provide all the IRS-required
information right at the point of sale. Other purchases will need to be
verified with receipts and dates and type of service. (Learn more about
substantiation on the following pages.)
• Receive one card when you enroll.
• Request additional cards for your spouse and dependents 18 years of age
or older for free.
• There’s no fee for replacing lost or stolen cards.

Step Three:
Verify &
Substantiation is the key to success
with your FSA.

For dependent care expenses, the IRS requires you to substantiate:
For medical expenses, the IRS requires you to substantiate:
Verifying your Discovery Benefits Debit Card
For both medical and dependent care purchases made on your Discovery
Benefits Debit Card, the IRS requires the expense to be verified.
Some of those purchases can be verified electronically right at the point of
purchase, so there’s no need for additional substantiation.
• Look for pharmacies and drug stores that have an Inventory Information
Approval System (IIAS) or that meet the IRS’s 90% rule. (Note: With 90%
merchants, you will still need to submit substantiation.)
• Find a current list of IIAS and 90% merchants online at
• In some cases, a Medical Necessity Form may be required if the expense
is considered both a medical expense and a general use item.
• Hang on to receipts in case you are later asked for verification of the
• You can upload and save receipts in your online account.
Other card purchases will require additional substantiation because the
providers don’t typically have the IIAS in place. They include:
• Doctor’s o�ce visits
• Hospitals
• Clinics
• Dental providers
• Vision/optical facilities
• Pharmacies and drug stores without an IIAS
• 90% merchants
• Date service was received
or purchase made
• Description of service or
item purchased
• Dollar amount
• Provider or store name
• In some cases, a Medical
Necessity Form, prescription or
physician letter may be required
Note: In some cases, the plan’s design requires that your health insurer’s
Explanation of Benefits (EOB) is provided as substantiation for your expense. If
you receive a receipt from your provider for a copay amount, make sure the receipt
says “copay.” If not, ask your provider to write “copay” on your receipt before
leaving the o�ce.
Vague or missing information causes your reimbursements to be held
up or become ineligible. Hang on to your receipts and documentation.
FSA: Over-the-Counter (OTC) Purchases
As a result of Health Care Reform, the IRS will require a prescription for OTC
medication to be eligible for reimbursement. Go to www.DiscoveryBenefits.com for
other reform updates.
• Dates of service
• Dollar amount incurred
• Day care provider name
• Day care provider signature
Note: Day care expenses must be incurred (not just paid) to receive
reimbursement. Registration fees cannot be reimbursed until the services
are actually incurred.
Vague or missing information causes your reimbursements to be held
up or become ineligible. Hang on to your receipts and documentation.
Helpful hint on using your card.
Don’t use the card for amounts that still
need to be processed by insurance, such
as deductibles and coinsurance. When
you receive your final statement from the
provider showing insurance has been
paid, write your Discovery Benefits debit
card number on the statement and mail it
to your provider.
Enrolled in a Limited Health FSA?
You can only use your Discovery Benefits
debit card for dental and vision expenses.
If your plan allows, once you meet your
annual deductible, you may use your
Limited Health FSA (but not your card)
for all eligible IRS expenses. Check your
Summary Plan Description for details
about the Limited Health FSA.

Choose the way you submit
your documentation.
• Enter claim information online.
• Upload your receipt.
• Reimbursement will be processed once your
substantiation is received and approved.
• Download and print the Out-of-Pocket Reimbursement
Request Form.
• Complete and fax the form, along with your substantiation, to:
• Complete the Out-of-Pocket Reimbursement Request Form
and mail it, along with your substantiation, to:
Discovery Benefits
PO Box 2926
Fargo, ND 58108-2926
• Download the free Discovery Benefits mobile application on
your Apple or Android device.
• Take a picture of your document using your device and submit
it through the app.
Choose your reimbursement method
• Direct deposit • Check
You’ll automatically receive a check unless you enroll in direct deposit.

Your privacy
HIPAA (the Health Insurance Portability and Accountability Act) has changed the way we share
information. We do not share balances, claims or payments with spouses or anyone else without an
assigned authorization form from you. If you decide you want us to share information with someone, simply
complete an Authorized Representative Form and send it to us. The authorization is in e�ect indefinitely,
unless we receive a written request from you to terminate the authorization.

866-451-3399 · 866-451-3245
PO Box 2926 · Fargo, ND 58108-2926
• File a claim
• Check account balance and claim status
• View account history
• Access administrative forms
• Contact us via email
• Manage your profile
• Live chat
• Speak to a service representative,
M-F, 6 a.m. - 9 p.m. CST
• Get answers to your FSA questions
• Access account balance information 24/7 through
an Interactive Voice Response (IVR) system
• Be prepared to verify the primary account
holder’s information when calling
We’re here for you.