FSA Frequently Asked Questions

Below you will find a series of frequently asked questions, broken down my category (both healthcare and dependent care, healthcare FSA, and dependent care FSA) that may assist you with enrollment or management of your FSA.

Both Healthcare and Dependent Care FSA Questions

Why use a Flexible Spending Account (FSA)?
Flexible Spending Accounts allows the account holder to save for expected out-of-pocket expenses such as medical, dental, vision and childcare. The primary benefit to an FSA is that the funds are set aside via payroll deduction on a pre-tax basis, thereby lowering the tax burden for medical and childcare bills. Penn State offers a Healthcare FSA and a Dependent Care FSA.

Do I have to pay federal taxes on the money I contribute to an FSA?
No. You can elect to reduce your pay, so your contributions are drawn from your pay before your Federal Income Tax withholding is determined. This is not a tax deferral, but a method to legally reduce the amount of your taxable income.

Do I have to pay state income tax on the money I contribute to an FSA?
All states allow for healthcare FSA contributions to be taken on a pre-tax basis.

Some, but not all, states allow for dependent dare FSA contributions on a pre-tax basis. You will want to verify your state rules for dependent care FSA contributions.

Do I receive a separate tax document when I contribute to an FSA?
No, there is not a separate tax document sent for your FSA contributions. These contributions will appear on your annual W-2 as follows:

• Healthcare FSA contributions will be identified on your W-2 as less taxable wages in box 1.
• Dependent care FSA contributions will be identified on your W-2 in box 10.

Do I have to have Penn State benefits (medical, dental, vision) to have an FSA?
No, you do not. Employees who are not enrolled in Penn State medical, dental, and/or vision benefit plans will still be able to enroll and access their elected FSA account through their My HealthEquity login.

How do I find out which expenses are eligible for reimbursement?

• Eligible Healthcare Expenses
• Eligible Dependent Care Expenses
• Non-Qualifying Medical Expense List

If I need to get in touch with my FSA customer service, who do I contact?
You will use the HealthEquity customer service number; 866-346-5800.

How do I use the website to access my funds?
You will access your flexible spending account through your My HealthEquity login. Begin by registering via the instructions that are sent to you from HealthEquity. These instructions may arrive via email or in postal mail to your home address on file with Penn State.  

How do I submit claims?
Submitting your reimbursement requests online is the fastest and most efficient method to utilize for reimbursement requests. However, if you need to submit the claim manually, the claim form available on the website contains the mailing address and fax number.

Can I choose the method for which I receive my claim reimbursement?
You will be able to choose if you would like to receive money via direct deposit or check to your home. Note that direct deposit provides the quickest and most convenient way to receive your reimbursement.

When submitting claims online, you will have the payment method available for each claim you submit, so you can change the reimbursement method per claim submission.

How do I set up the direct deposit option?
To activate the direct deposit option, login to your My HealthEquity account. There will be options to add your direct deposit banking information to your account.

Will I receive notifications of when a claim is received, when a claim is denied, or when my reimbursement has been processed?
You have the option to sign up for electronic notifications from your HealthEquity account. This may be in the form of email or an alert from the HealthEquity app. Provided you have set these notifications up you will receive notification of any transactions to your account.

What do I do if my claim is denied?
If you believe that your claim was denied in error, you can contact HealthEquity customer service at 866-346-5800. You will be notified of the appropriate procedure should you wish to pursue an appeal.

What is the deadline for submitting my claims for reimbursement if I disenroll from the FSA, terminate employment, or retire?
If you have terminated employment or retired, you have 90 days from the termination/retirement date to submit claims for reimbursement. Please note that you may only submit claims that are incurred on or before your termination/retirement date.

What occurs with my FSA in the event of my death before funds are fully utilized?
You have the ability to assign “authorized users” of your FSA. Should you pass away before using all FSA funds within a calendar year, your authorized user will be able to still submit claims up to 90 days from the date of death. Please note that you may only submit claims that are incurred on or before the date of death.

Additionally, if you have no authorized user assigned, the individual who handles your estate after death would be able to contact Penn State Employee Benefits in order to assist with HealthEquity communications and gain access to funds. 

Can I be reimbursed for an expense that was incurred before I enrolled in an FSA?
No. You cannot incur an expense and then decide to open an FSA. All expenses must be incurred after your account has started to be eligible for reimbursement.

Will I receive FSA statements and will I have the ability to print statements of my claim activity?
Yes. You will receive electronic statements which you can print. You can also print your claim activity from your My HealthEquity account.
 

Healthcare FSA Questions

Can I change my healthcare FSA contribution amounts?
Making changes to your healthcare FSA contribution is limited to the annual open enrollment period or with an IRS qualifying event as outlined below:

• Marital status (marriage or divorce, not to include separation).
• Change in number of dependents (includes birth, adoption, placement for adoption, and death).
• Change in employment; termination, commencement of employment, strike, lockout, return from unpaid leave, change in worksite, reduction or increase of work hours, or other employment changes that affect benefit eligibility.
• Change in place of residence that may impact coverage area for insurance.

Any change to healthcare FSA contributions must, per IRS regulations, be on account of and consistent with the change in family status. To change a contribution because of a life event, employees should complete a change request in Workday within 31-days following the event.

May I use the healthcare FSA for my eligible dependents?
Yes, the healthcare FSA may be used for your spouse or eligible dependent children who are eligible for coverage under the employee's plan; including dependent children up to age 26.

Can I enroll in the healthcare FSA if my spouse is enrolled in a high-deductible health plan (HDHP; like Penn State’s Lion Advantage HSA plan) with a Health Savings Account (HSA)?
No. The IRS does not permit use of a health care FSA when enrolled in an HSA. However, the Dependent Care FSA is available to either employee up to the IRS limits.

Will I receive a debit card with my healthcare FSA?
Yes, you will receive a healthcare Visa debit card in the mail with instructions on how to activate. The debit card can be used for health care FSA expenses only – dependent care expenses cannot be paid using the debit card.

Can I order additional debit cards?
You will automatically receive one debit card prior to the start of your new plan year, if you did not participate in the previous year.  If you want an additional card, you may order it on the member website or by calling HealthEquity at 866-346-5800.

Will I receive a new debit card each year?
No, you should keep your card from year to year. Each year you elect an FSA the card will be “reloaded” with your new FSA amount election.

Will I be able to view debit card information online, and if so, what type of information is available?
You will be able to view all debit card transactions online for which you have used your FSA debit card. If substantiation is required for a debit card purchase, this request would also be made through your online My HealthEquity login.

Do I need to keep my receipts for purchases made with my FSA debit card?
While you are not required to use your healthcare FSA debit card, but if you do you should ALWAYS retain receipts for purchases made with your debit card for tax purposes, as you may be requested to provide receipts for certain purchases.

You are being issued the debit card for the convenience of being able to access your FSA funds at the point of sale. Even though you can access these funds easily, HealthEquity and Penn State still must be able to “substantiate” that all purchases made were for eligible products and services under the FSA. Through participation in a Penn State medical plan, no substantiation should be needed for prescription or office visit copays.

In situations where HealthEquity is not able to substantiate the purchases automatically, you will receive a letter asking for documentation or receipts.  There will also be notifications on the HealthEquity web site if your claim needs additional attention. If you are not able to provide documentation you may lose the ability to use your debit card.

If you are not covered under the Penn State medical plan, but are covered through another employer or individual carrier, you will be required to “substantiate” all your services, as HealthEquity will not have access to those claims.

How do I access my healthcare FSA funds for current year expenses?
There are four ways for you to receive payment through your FSA:

1. Health Care Debit card – which can be used at the point of purchase for doctor’s office visit copayments, prescription drug coinsurance (including drugs purchased at UHS), medical deductible and coinsurance, dental services and vision services.
2. You can access your claims through the HealthEquity web site and submit the claims to have your cost share (copayments, deductibles, and coinsurance) automatically paid to your network provider.  This feature will apply only to those enrolled in the Penn State medical, dental, and/or vision plan(s).
3. You can submit a claim through the HealthEquity web site and have payments deposited into your bank account.
4. You can submit a claim through the HealthEquity web site and have a check mailed to you.

If I participate in the Penn State Lion Traditional medical plan, will I be able to pay my providers directly from my healthcare FSA?
Yes, you will be able to pay your network medical providers directly from your spending account when you submit your FSA claims online from your My HealthEquity account. When the claim completes processing, you can direct your cost share (deductible, coinsurance, copayments) to be paid directly to your network provider with a click of a button. HealthEquity recommends that before paying your provider through your My HealthEquity account, to wait for your insurance Explanation of Benefits (EOB) and a bill from the provider office to ensure that all claims dollar amounts match before payment is made.

Will my provider receive an Explanation of Payment (EOP)?
When you direct a claim to be paid directly to your provider, the provider will receive an EOP for payments made to them from your spending account on your behalf.

Will I be able to pay providers on medical claims that have been adjusted?
If your medical claim must be reprocessed or adjusted, your spending account reimbursement may also have to be adjusted. Some claims are reprocessed or adjusted weeks or months after the original processing. To ensure that the provider is not overpaid, any payments that occur after the original claim is processed will be sent to you, not the provider.

Will I be able to pay my dental or vision providers directly from my healthcare FSA?
Dental and Vision reimbursement requests can be paid directly to providers as well. You may use also your healthcare debit card for payment at point of service or to pay bills you receive. Just remember to save your receipts for “substantiation.”

When will a payment not be eligible for Direct Payment to Provider (DPTP)?
There are several reasons that a transaction would not be eligible for DPTP: 

1. If there are no funds in the account.
2. If the provider’s tax information cannot be verified – situations where the provider’s tax information cannot be verified should be very rare, but every effort is made to validate each provider.
3. If the transaction is a claim that had to be reprocessed.

If payment is not able to be made to the provider, then payment will come to you instead.
 

Dependent Care FSA Questions

Can I change my dependent care FSA contribution amounts?
Making changes to your dependent care FSA contribution is limited to the annual open enrollment period or with an IRS qualifying event as outlined below:

• Marital status (marriage or divorce, not to include separation).
• Change in number of dependents (includes birth, adoption, placement for adoption, and death).
• Change in employment; termination, commencement of employment, strike, lockout, return from unpaid leave, change in worksite, reduction or increase of work hours, or other employment changes that affect benefit eligibility.
• Change in place of residence that may impact coverage area for insurance.
• Dependent no longer meets qualifications for dependent care.
• Change in your dependent care costs.

Any change to dependent care FSA contributions must, per IRS regulations, be on account of and consistent with the change in family status. To change a contribution because of a life event, employees should complete a change request in Workday within 31-days following the event.

Who are eligible dependents that I may use the dependent care FSA for?
Dependent care FSA's can be used for work-related daycare for dependents up to the age of 13, nursery school, or adult day care services for an eligible tax dependent.  A dependent care FSA is NOT to be used for dependent’s medical expenses.

If I request reimbursement of dependent care expenses, can I also receive tax credit for these expenses?
You may not receive reimbursement of expenses under your Dependent Care FSA and claim the Dependent Care Tax Credit for the same expenses on your Federal Income Tax return. Some participants may benefit more by claiming the Dependent Care Tax Credit. You should consult with your tax professional to determine which will provide you with the greater benefit.

What documentation is required when submitting a claim for funds from the dependent care FSA?
You will need to have an invoice or account statement from the dependent care provider when submitting your claim with HealthEquity.

Are Kindergarten expenses eligible for dependent care FSA reimbursement?
No. Kindergarten is educational in nature. Therefore, kindergarten expenses are not eligible for reimbursement.

Are nursery school expenses eligible for dependent care FSA reimbursement?
Yes. Nursery school or similar programs below kindergarten level are expenses considered to be eligible for reimbursement.

Are payments to babysitters eligible for dependent care FSA reimbursement?
Incidental babysitting services are not an eligible expense. However, if you have an individual who provides childcare services while you are at work, whether the care is provided in your home or theirs, if they claim the amount and you pay them as taxable income, you can be reimbursed for those expenses. 

In addition, the individual providing care cannot be the child of an FSA participating employee who is under the age of 19, cannot be a child claimed as a dependent on the participating employee or spouse’s tax return, and cannot be the spouse of the employee nor be the parent of the child.