Key IRS Rules to Play By
The IRS has strict rules about using a flexible spending account plan:
- Flexible spending plans are a great way to s-t-r-e-t-c-h your paycheck and save on the cost of unreimbursed medical, dental and child or eldercare expenses for you and your family. So… anticipate your expenses carefully to avoid leaving money in your account.
- Dependent children who are in daycare, after school care or day camps must be under the age of thirteen (13).
- In order to participate in a Dependent Care program, parent(s) must be gainfully employed, seeking gainful employment or be full time students.
- Expenses submitted for claim reimbursement must be incurred during the plan year.
Please read these guidelines carefully to learn how to take full advantage of a flexible spending plan. Feel free to call ABS or your benefits point person should you have any questions!
Save all your receipts in one place, perhaps in a file or envelope to help you stay organized throughout the plan year.
Receipts must show:
- Name and address of the service provider
- Date service/expense was incurred
- Name of person for whom service/expense was provided
- Detailed description of the service/expense provided
- Amount charged for the service
The IRS does not consider credit card receipts, cancelled checks or balance forward statements as acceptable forms of receipts. For over-the-counter (OTC) items; include a doctor’s note and clarify the specific item or include a photocopy of the package.
Examples of receipts include:
- Doctor office co-payments
- Receipts from daycare or qualified eldercare facilities or copies of receipts you pay to in-home providers
- Explanation of Benefit (EOB) statements from your insurance provider which shows the amount or percentage of a medical or dental charge your insurance company paid and how much you owe (i.e. deductibles, co-insurance payments, out of pocket expenses, etc.)
- Orthodontia, a copy of the contract
Receipts are required to verify that you are spending money from your account on qualified expenses. You can submit your receipts once or as often as you like. However, processing of reimbursement checks require a minimum of $20.00 of receipts. You may access your personal account online or call ABS to confirm account balances.
- The birth or adoption of a child
- Marriage, divorce or legal separation
- Spouse employment changes