* The Health Care Reimbursement Account (FSA) is only available if you are not enrolled in the Consumer-Driven Health Plan (CDHP) or you are not eligible for a Health Savings Account (HSA). IRS rules do not let you have both an HSA and an FSA.

How These Accounts Work

Here’s a step-by-step look at how these accounts work.

Step 1: Decide How Much To Contribute

With the Health Care Reimbursement Account, you can add up to $2,650 a year.

With the Dependent Care Reimbursement Account, you can contribute up to $5,000 a year ($2,500 if you are married but file separate tax returns).

With both accounts, your contributions come out of your paycheck before taxes.

Step 2: Pay for Eligible Expenses

With the Health Care Reimbursement Account, you can use your debit card to pay for care. You have access to the full amount you contribute for the year up-front.

With the Dependent Care Reimbursement Account, you pay the expense up-front and then file a claim for reimbursement. You must have the money in your account before you can receive reimbursement.

FSA vs. HSA: Which One Is For You?

Both are tax-saving accounts, but there are some pretty big differences. Get the details.

Know the Ins and Outs

Keep these rules in mind.

  • Use it or lose it! Unlike the HSA, you lose any Reimbursement Account money you don’t use by December 31, 2019. You have until March 31, 2020, to request reimbursement and file claims for 2019 expenses. Any remaining amount will be forfeited. For the Health Care Reimbursement Account only, you can roll over $500 of unused funds to the next year.
  • No interest and you can’t take it with you. The money in your Reimbursement Account does not earn interest, and you can’t take it with you if you leave the company.
  • Keep your receipts! Make sure to keep your receipts in case you need to verify your purchase.

Tax Advantages x 2@Work

Reimbursement Accounts have double tax advantages.

  • Pre-tax savings. Your contributions come out of your paycheck before your taxes are taken out, which means you pay less in taxes.
  • Tax-free withdrawals. When you use the money for eligible expenses, there are no taxes to pay.

Reimbursement Accounts at Glance

Here are the need-to-know details about the accounts.

Health Care Reimbursement Account Dependent Care Reimbursement Account
Who can use it If you are not enrolled in the CDHP or you are not eligible for a Health Savings Account (HSA) If you have dependent care expenses so you (and your spouse, if married) can work, look for work or attend school full time
How much you can add Up to $2,650 a year Up to $5,000 a year ($2,500 if you are married but file separate tax returns)
Whose expenses are eligible Yours, your spouse’s and your eligible dependents’ Your children under age 13 who qualify as dependents on your federal tax return, a spouse or unmarried child of any age who is physically or mentally incapable of self-support, and other family members who are physically or mentally incapable of self-support, who live with you for more than half the year and who qualify as dependents on your federal tax return
What you can use it for Eligible medical, prescription drug, dental and vision expenses.

For a complete list of covered expenses, visit the IRS site.

Eligible dependent care expenses such as licensed nursery schools, licensed day care centers for children and disabled dependents, after-school care and services from a care provider (must be age 19 or older and not claimed as a dependent on your federal tax return)

For a complete list of covered expenses, visit the IRS site.