FSA Flexible Spending Account
Cummins provides both a Health Care Flexible Spending Account (HC-FSA) and a Dependent Care Flexible Spending Account (DC-FSA).
When you elect either the HC-FSA or the DC-FSA, once your enrollment period ends, you cannot stop, start, or change the annual goal amount you elected to contribute unless you experience a qualified life event and the change is consistent with the event.
What is a Health Care Flexible Spending Account (HC FSA)?
The Health Care Flexible Spending Account (HC-FSA) is a tax-free account that allows you to pay for qualified medical, prescription drug, dental and vision expenses. Our HC-FSA is administered by HealthEquity and will come with a debit card that you can use at the doctor’s office or drugstore to pay for expenses such as deductibles, copays, coinsurance. FSAs are regulated by the Internal Revenue Service (IRS), who determines contribution limits, qualifying expenses and has designated it as a “use it or lose it” account.
LIMITATIONS: You cannot participate in an HC-FSA and a Health Savings Account (HSA) at the same time.
Eligibility and Enrollment:
- Enrollment in a medical, dental and/or vision plan is not required for you and/or your federal tax dependents to participate in the HC-FSA.
- During an eligible enrollment period, you can elect to participate in the HC-FSA by setting an annual goal amount to contribute from your pre-tax earnings. The amount you elect will be divided by the number of remaining pay periods in the plan year.
- Plan carefully – once your enrollment period ends, you cannot stop, start or change the annual goal amount you elected to contribute unless you experience a qualified life event, and the change is consistent with the life event.
- Your HC-FSA enrollment elections do not rollover year after year. You must re-enroll during our annual Open Enrollment event if you wish to contribute your account for a new plan year.
Tax-Free Advantages: By making contributions via pre-tax payroll deductions, you do not pay taxes on the money you put into your account. This lets you achieve more spending power with post-tax money in your checking account.
You must “use it or lose it”: Any funds in your HC-FSA must be used during the plan year. Any money left in your account after the plan year will be forfeited and cannot be reimbursed for any reason. You will have until March 31 of the following year to request reimbursement for expenses incurred during the current plan year.
No transfers: You cannot transfer money from one account to the other, such as moving Dependent Care FSA funds to your HC-FSA. And you cannot use money from your HC-FSA to pay for day care expenses, nor can you use money from your DC-FSA to pay for health expenses.
Annual Contributions:
The IRS sets the annual HC-FSA contribution limit each year. The maximum contribution amount to the HC-FSA for 2024 is $3,200. Your annual goal amount can be a minimum of $100 per year and up to an annual total maximum of $3,200 for the 2024 plan year. The money is deducted from your paycheck pre-tax.
Eligible expenses:
Please keep in mind that IRS rules determine which expenses are eligible, and some expenses require a doctor’s note or prescription to be eligible for reimbursement under your Healthcare FSA. We encourage you to check with your tax professional if you have questions about whether a particular expense is eligible for reimbursement under this program.
Examples of eligible expenses for you or your qualifying dependent include:
- Medical and dental plan deductibles, copays and coinsurance
- Expenses not covered under your medical or dental plan (except cosmetic services)
- Expenses that exceed reasonable and customary limits
- Vision care exams
- Prescription glasses or contacts not covered by vision plan benefits
- Prescription drug copays
- Select types of medical equipment or supplies
- LASIK eye surgery
- Click here for a searchable list of eligible of HC-FSA qualified expenses
How to use your HC-FSA:
New account holders will receive a Welcome Kit from HealthEquity. The kit includes helpful information, how to access your account and a HealthEquity HC-FSA debit card.
Using your HC-FSA for expenses:
- Your HC-FSA will come with a debit card that you can use to pay for your eligible expenses.
- Remember to save all receipts; you will need them to validate your expenses if audited.
- Your expenses must be incurred during the calendar year to be reimbursed from your HC FSA, but you can submit claims for your qualifying expenses through March 31 of next year.
- Only expenses incurred while you are a participant in the HC-FSA are eligible for reimbursement. Expenses incurred before your participation in the plan began or after your participation in the plan ends are not eligible for reimbursement.
- HC-FSA include use-it-or-lose-it rules. Unused account funds will return to your employer at the end of the plan year.
What is a Dependent Care Flexible Spending Account (DC FSA)?
A Dependent Care Flexible Spending Account (DC-FSA) is a pre-tax benefit account used to pay for qualified dependent care expenses. DC-FSA funds can pay for services such as preschool, summer day camp, before or after school programs, and child or elder daycare. You decide how much to contribute to your DC-FSA, and funds are withdrawn automatically from each paycheck for deposit into your account before taxes are deducted. As soon as your account is funded, you can use your funds to pay for many eligible dependent care expenses. Click here a list of qualified DC-FSA expenses.
Eligible DC-FSA dependents include:
- A child under the age of 13 who resides with you and for whom you are entitled to a personal tax exemption as a dependent.
- Keep in mind that if you are divorced, the child is a qualifying individual with respect to you if the child lives with you even if you have permitted the noncustodial parent to take the exemption.
- A spouse, parents, or other tax-dependent adults who reside with you and who are physically or mentally incapable of self-care.
Eligible expenses: include expenses to care for your eligible dependent in your home, in someone else’s home, or at a childcare or dependent care facility like a day care center or nursery.
- You will be required to list the licensed provider’s ID number or Social Security number when you request reimbursement.
- If you use a caretaker in your immediate family, those expenses are not eligible for reimbursement through the DC-FSA.
- Click here for a searchable list of eligible of DC-FSA qualified expenses or here for examples of eligible and ineligible expenses.
- You can also check with your tax professional if you have questions about whether a particular expense is eligible for reimbursement under this program.
- Remember to save all receipts, which are required for reimbursement and validation of expenses.
IRS restrictions:
- No mid-year changes: You cannot stop, start or change the amount of money you elected to contribute during the plan year unless you experience a qualifying event. If you experience a qualifying event, your change must be consistent with your life event change.
- You must “use it or lose it”: Any funds in your DC-FSA must be used during the plan year. Any money left in your account after the plan year will be forfeited and cannot be reimbursed for any reason. You will have until March 31 of the following year to request reimbursement for expenses incurred during the current plan year.
- No transfers: You cannot transfer money from one account to the other, such as moving DC-FSA funds to your HC-FSA. And you cannot use money from your HC-FSA to pay for daycare expenses, nor can you use money from your DC-FSA to pay for medical expenses.
- Tax credits: You cannot be reimbursed from your DC-FSA for any expense that’s also covered by a tax credit on your federal tax return. Talk to your tax advisor to decide whether enrolling in a DC-FSA or taking the Child Care Tax Credit is better for your financial situation.
Annual contribution limits
The Internal Revenue Service (IRS) sets the annual DC-FSA contribution limit each year. You can contribute up to the maximums listed below:
- If single or married and filing jointly: $5,000.
- If married and filing separately: $2,500 (your maximum contribution cannot exceed your earned income or your spouse’s earned income, whichever is less).
- For the purposes of compliance with nondiscrimination testing, Cummins limits the DC-FSA contribution to a maximum of $2,500 for employees with an annual base salary of $130,000 or more.
Your DC-FSA funds are only accessible as they are deposited with each payroll deduction. Your full DCFSA election is generally not available at the start of a plan year.
Plan your contributions carefully. Due to IRS rules, you will forfeit any funds remaining in your DC-FSA on March 31 of the following plan year.
How to use your DC-FSA
New account holders will receive a Welcome Kit from HealthEquity. The kit includes helpful information, how to access your account and a HealthEquity DC-FSA debit card. As you incur dependent care expenses, pay for them by using your HealthEquity DC-FSA debit card or out-of-pocket and use the reimbursement feature on your HealthEquity account. You are required to upload proof of the expense to your HealthEquity account before the transaction will be released.
- Your expenses must be incurred during the calendar year to be reimbursed from your DC-FSA but you can submit claims for your qualifying expenses through March 31 of next year.
- Only expenses incurred while you are a participant in the DC-FSA are eligible for reimbursement. Expenses incurred before your participation in the plan began – or after your participation in the plan ends — are not eligible for reimbursement.
- DC-FSA include use-it-or-lose-it rules. Unused account funds will return to your employer at the end of the plan year.
Election changes
Electing to contribute to a DC-FSA can be done during a New Hire event or during our annual Open Enrollment event. Plan your contribution amount carefully. After you elect your benefits, you cannot stop, start or change the election unless you experience a qualifying event. If you experience a qualifying event, your change request must be consistent with your life event change, and you must make the change request within 31-days of the qualifying event.
What are the IRS restrictions?
What are the IRS restrictions for both Health Care Flexible Spending Account (HC-FSA) and a Dependent Care Flexible Spending Account (DC-FSA) ?
No mid-year changes: Outside of a qualifying event (such as marriage, divorce or the birth of a child), you cannot stop, start or change the amount of money you elected to contribute during the plan year. If you experience a qualifying event, your change must be consistent with your life event change.
You must “use it or lose it”: Any funds in your HC FSA must be used during the plan year. Any money left in your account after the plan year will be forfeited and cannot be reimbursed for any reason. You will have until March 31 of the following year to request reimbursement for expenses incurred during the current plan year. This “use it or lose it” rule makes it very important to estimate carefully before electing your annual contribution.
No transfers: You are unable to transfer money from one account to the other, such as moving Dependent Care FSA funds to your HC FSA. And you cannot use money from your Health Care FSA to pay day care expenses. Nor can you use money from your DC FSA to pay for medical expenses.
Downloads
Flexible Spending Account (FSA) Plan
HealthEquity FSA Quickstart Guide