Section 125 Flexible Spending Accounts - Benefits Office

Section 125 Unreimbursed Medical

The Section 125 Unreimbursed Medical, administered by American Fidelity, allows you to set aside a portion of your annual earnings on a before-tax basis to pay for eligible healthcare expenses that you incur during the year.

You may allocate up to $4,000 pre-tax per calendar year for reimbursement.  The Internal Revenue Service has recently announced that Employers may now allow Health FSA participants to carryover up to $500 of unused account balance from one plan year to the next plan year.  This balance may then be used to reimburse eligible medical expenses incurred during any part of the next plan year.

The carryover amount will not affect the Health FSA maximum contribution limit of $2,500.  Therefore, a Health FSA participant could elect $2,500 for the new plan year and carryover $500.00 from the current plan year for a total of $3,000 available to reimburse qualified medical expenses in the new plan year.

Ohlone Community College has made the decision to allow for the carryover provision for the Health FSA for the Section 125 plan year.  This means that unused balances at the end of the run-off period for the current plan year in excess of $5 but not to exceed $500, will be carried over and added to the account balance for the new plan year. 

IRS guidance does not allow for a plan to have both the carryover provision and the grace period provision.  The grace period is the additional 70 days at the end of the plan year during which a Health FSA participant may incur expenses and be reimbursed out of the prior year’s remaining balance. 

What It Covers

The healthcare FSA covers certain medical expenses, including:

  • Amounts for copayments, deductibles, and coinsurance.
  • Expenses not covered by medical, dental, vision, or pharmacy plans.

To learn more about the healthcare FSA and qualifying expenses, visit American Fidelity website at http://afadvantage.com/ or call (800) 654-8489.

Important Information about the Healthcare Flexible Spending Account

  • Ohlone Community College has made the decision to allow for the carryover provision for the Health FSA for the Section 125 plan year.  This means that unused balances at the end of the run-off period for the current plan year in excess of $5 but not to exceed $500, will be carried over and added to the account balance for the new plan year. 
  • The FSA is available for eligible expenses incurred by you and/or your eligible dependents.
  • You do not need to enroll in the medical, dental, and/or vision plan in order to enroll in the healthcare FSA.
  • Due to IRS rules, over-the-counter medications are not eligible for FSA reimbursement without a prescription.
  • To participate in the FSA, you must re-enroll each year. Your annual pledge will not carry over.

Section 125 Dependent Day Care

The dependent care Section 125, administered by American Fidelity, allows you to set aside a portion of your annual earnings on a before-tax basis to pay for dependent care expenses that you incur during the year.

You can contribute between $250 and $5,000 per year, or $2,500 each if you are married and filing separate tax returns. If your spouse does not work, you cannot use the dependent care FSA unless your spouse is disabled, is a full-time student for at least five months of the year, or is looking for work.

You must use all contributions by December 31 and file all claims by March 31 of the following year. You cannot carry forward unused contributions to the following year. You must submit a paper claim form for reimbursement of eligible expenses.

What It Covers

A dependent care FSA covers certain expenses, including:

  • Eligible childcare expenses while you are at work, before and after-school programs, day care, day camp, and pre-school.
  • Elder care (qualifying relative per IRS definition).

To learn more about the Dependent Day Care Section 125 and qualifying expenses, visit American Fidelity website at http://afadvantage.com/ or call (800) 654-8489.