Southwest Care Center Open Enrollment Runs from Nov. 11th through Nov. 25th, 2024
Spending Accounts
Spending accounts are financial tools that allow individuals to set aside pre-tax or tax-advantaged funds for specific purposes. Southwest Care Center offers 3 types of spending accounts as described below.
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MEDICAL FLEXIBLE SPENDING ACCOUNTS (FSA)
Medical Flexible Spending Accounts allow employees to set aside pre-tax dollars to pay for eligible out-of-pocket expenses. Only those who elect the Preferred Provider Plan (PPO) can take advantage of this type of savings account. Below are the key features:
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Pre-Tax Contributions: Employees contribute a portion of their salary to the FSA before taxes are deducted, reducing their taxable income.
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Eligible Expenses: Funds can be used for a variety of qualified expenses, including medical, dental, and vision care costs, for self and dependent care expenses.
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Immediate Access: Unlike some accounts including the HSA, the total annual contribution is available for use at the start of the plan year, allowing employees to access the full amount even if they haven't yet contributed that much. You will receive a debit card for point of service transactions.
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Use-It-or-Lose-It Rule: Unused funds at the end of the plan year will be forfeited, although there is a carryover option period for spending the remaining balance. The rollover limit for 2025 is $660.
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Contribution Limits: The annual contribution limits set by the IRS in 2025 is $3,300 individual/$6,600 combined. For detailed information visit the IRS website publication 969.
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Employer Contributions: Unlike the HSA, there is no employer contribution to the FSA.
LIMITED FLEXIBLE SPENDING ACCOUNT
A Limited Flexible Spending Account (Limited FSA) is a type of FSA that allows you to set aside pre-tax dollars to pay for specific types of expenses including dental and vision costs. Those who have elected an HDHP with HSA may take advantage of the Limited FSA for additional tax-advantaged cost savings. Here are some key points about a Limited FSA:
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Eligibility: Limited FSAs are offered to individuals who also have a Health Savings Account (HSA). This setup helps maintain HSA eligibility.
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Qualified Expenses: Unlike a Medical FSA, which can be used for a broader range of medical expenses, a Limited FSA only covers specific expenses, such as dental treatments (e.g., cleanings, fillings) and vision expenses (e.g., glasses, contact lenses).
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Tax Benefits: Contributions to a Limited FSA are made with pre-tax dollars, reducing your taxable income, and saving you money on taxes.
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Contribution Limits: For 2025, the contribution limit for Limited FSAs is $3,300.
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Use-It-or-Lose-It Rule: Limited FSA funds must be used within the plan year but does offer grace period or allow up to $660 to be rolled over.
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Compatibility with Health Savings Accounts (HSAs): Limited FSA can be used alongside an HSA, allowing individuals to take advantage of both accounts for diverse types of expenses.
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Easy Reimbursement Process: Limited FSAs offer straightforward reimbursement processes with the added convenience of a debit card specifically for point of service transactions.
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Employer Contributions: Unlike the HSA, there is no employer contribution to the FSA.
DEPENDENT CARE FLEXIBLE SPENDING ACCOUNT
A Dependent Care Flexible Spending Account (Dependent Care FSA) is a pre-tax benefit account that allows employees to set aside money to pay for eligible dependent care expenses. These expenses typically include costs associated with the care of children under 13 or disabled dependents of any age. Those who have elected an HDHP with HSA or the PPO may take advantage of the Dependent Care FSA for additional tax-advantaged cost savings. Here are some key points about this type of spending account:
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Eligible Expenses: This account covers costs related to the care of dependents, such as daycare, preschool, and after-school programs for children under age 13, as well as care for disabled dependents of any age.
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Tax Advantages: Contributions to a Dependent Care FSA are made with pre-tax dollars, which reduces taxable income and can lead to tax savings.
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Contribution Limits: The IRS sets annual contribution limits for Dependent Care FSAs. The limit for a dependent care flexible spending account (FSA) in 2025 is $5,000 for single filers and couples filing jointly, while married couples filing separately can contribute up to $2,500.
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Use-It-or-Lose-It Rule: Funds must be used by the end of the plan year or within the grace period established by the plan which allows a rollover of $640. Unused funds will be forfeited.
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No Double-Dipping: You cannot claim the same expenses for both a Dependent Care FSA and the Child and Dependent Care Tax Credit on your tax return.
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Reimbursement Process: Employees can submit claims for reimbursement for eligible expenses, often requiring receipts or documentation of care.
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Eligibility Requirements: To use a Dependent Care FSA, the care must enable the employee to work or look for work, and the dependent must meet specific eligibility criteria.