Flexible Spending Accounts
The State of Montana offers two types of flexible spending accounts (FSAs), a medical spending account for eligible health care expenses and a dependent care spending account for eligible dependent care expenses. Participation in this plan does not carry over into subsequent plan years. Participants must re-enroll each new plan year. The flexible spending accounts are administered by Allegiance Flex Advantage. There is no monthly administrative fee for one or both types of FSAs.
Quick Information Links
Medical Spending Account
The medical spending account allows you to elect to use before-tax dollars to pay for your out-of-pocket medical expenses, including deductibles, copays, and prescriptions. Dental and vision expenses may be reimbursed, too. Eligible expenses include those defined by IRS Code, Section 213 (d). The amount you elect will be reimbursed to you for the eligible expenses that you, your spouse, and your tax dependents incur during the benefit plan year (always January 1 through December 31). The entire annual amount you elect can be used at any time during the plan year after your first payroll deduction is taken.
Dependent /Childcare Account
If both you and your spouse work or you are a single parent, you may have dependent care expenses. Without a dependent care account, the only tax help for you is the Federal Child Care Tax Credit. An FSA may give you a better tax benefit, so compare them before making your annual FSA election. A dependent receiving care must live in your home at least 8 hours per day. Your FSA lets you use before-tax dollars to pay for the care of children age 12 and under, or individuals unable to care for themselves while you or your spouse go to work or school. The care may be provided through live-in-care, baby sitters, or licensed day care centers. You cannot use before-tax dollars to pay your spouse or one of your children under the age of 19 for providing care. Schooling expenses for kindergarten and up is not reimbursable. The maximum you can elect in a plan year is equal to the lesser of the following:
- $5,000 married filing joint federal taxes;
- $2,500 Married filing separate federal taxes; or your earned income or your spouse’s earned income.
Dependent Care FSAs can only reimburse up to the current account balance at the time a reimbursement claim is submitted. Services must be rendered before reimbursement can be paid.
Enrollment Eligibility
All active employees eligible for State benefits are eligible for the Flexible Spending Account (FSA) Program. New employees must enroll within 31 days of hire. Current employees may enroll in the FSA program during the annual change period or upon a qualifying event, such as marriage or birth or adoption of a child. Participation in this plan does not carry over into subsequent plan years. Participants must re-enroll each new plan year.
How FSAs Work
With FSAs, employees have the opportunity to make choices to help their employee benefits meet their family’s needs while saving money. When you participate in an FSA, you elect to have a specified amount of before-tax dollars deducted from your paycheck each pay period. You may use this before-tax money in two areas:
- Out-of-pocket medical expenses (not covered by the beneefit plan)
- health benefit plan deductibles, copays, and coinsurance
- prescription drug costs
- dental and vision expenses
- non-covered medical expenses
- Dependent care expenses
- child care (age 12 and under)
- disabled dependent care
The Medical and Dependent/Child Care FSAs are separate accounts. If you enroll in both, you may not use funds deposited in the medical FSA for dependent care expenses, or vice-versa.
FSAs Put Tax Dollars Back In Your Pocket
Mary is a single mother of three earning a salary of $3,000 per month. Her oldest child has braces and Mary is paying the orthodontist $150 per month. Mary takes a prescribed maintenance drug that costs her $50 per month. Mary’s youngest child attends preschool while Mary is at work and she is paying $300 per month to the daycare provider. The following is a comparison of Mary’s monthly take-home pay if she enrolls in FSAs to her take home pay without FSA enrollment.
| FSA | No FSA | |
| Gross Pay | $3000 | $3000 |
| FSA Election | $500 | $0 |
| Taxable Pay | $2500 | $3000 |
| Federal Tax* | $175 | $253 |
| State Tax* | $83 | $125 |
| FICA | $140 | $170 |
| Net Pay | $2080 | $2452 |
| Prescription | $0 | $50 |
| Braces | $0 | $150 |
| Day Care | $0 | $300 |
| $ in Your Pocket | $2102 | $1952 |
| *tax based on 2011 Federal and Montana payroll tax withholding tables, claiming 3 allowances, and the current 5.65% FICA/Medicare rate. | ||
Participation in FSAs allows Mary to receive an extra $150 in her pocket each month or $1,800 additional yearly income.
Use It or Lose It!
Be careful when deciding on your election amount to make sure you do not elect more than you know you and your tax dependents are going to use within the plan year. Under the use-or-lose rule, any money not used by the end of the plan year cannot be returned to you. No changes are allowed to your elections after the first 31 days of employment unless you experience a qualifying event.
Mid-Year Election Changes
There are limited opportunities to change your election during the plan year. Contributions can only be changed if you experience a qualifying event such as:
- marriage;
- divorce;
- birth of a baby;
- adoption of a baby;
- death of a spouse/dependent child;
- a change in employment status which warrants the change.
The change must be consistent with the change in family status. For example, new dependents warrant increasing a medical FSA, not decreasing it. The change must be made within 63 days of the qualifying event or in the case of births/adoptions within 63 days after the 31-day automatic coverage ends (94 days from date of birth/adoption).
Tax Issues
Health care expenses reimbursed through the flex plan are exempt from all federal and state income and FICA/Medicare taxes. Since you receive pre-tax treatment on the money you place in an FSA, you cannot claim the items reimbursed to you through an FSA on your tax return. Without an FSA, medical expenses are only deductible if they exceed 7.5 percent of your adjusted gross income.
**If you are close to Social Security Normal Retirement Age - Remember, gross earnings for purposes of determining Social Security benefits are reduced by pre-tax deductions.
Getting Reimbursed
To be reimbursed for qualified expenses, submit a claim form and expense receipt (i.e. EOB or day care provider receipt) to Allegiance online, by fax (406-523-3149 or 877-424-3539 toll free) or mail (PO Box 4346, Missoula, MT 59806). Claims are normally processed within five business days of receipt.
Allegiance does not release funds until at least $15 in eligible reimbursements is accrued.
SUBMIT A CLAIM ONLINE:
- Go to allegianceflexadvantage.com
- Complete the online form
- Attach your documentation (scanned or downloaded)
- Submit
You will usually have a check in your mailbox less than a week after you have submitted your claim. Allegiance will electronically deposit reimbursements directly into your checking account if you send in the Automatic Deposit Authorization form with a voided check.
Allegiance Services
Customer Service representatives are available to answer your questions by phone each business day between 7:00 a.m. and 6:00 p.m. After hours and on weekends, you can access a toll-free automated voice response system for your account information by calling (866) 339-4310 (toll free) or (406) 721-2222.
You can also access the Allegiance website, http://www.allegianceflexadvantage.com, 24 hours a day, seven days a week. Allegiance’s website offers a wealth of resources for FSA participants:
- Check your account balances
- View the explanation of benefits for processed claims
- Print claim and direct deposit forms
- Ask questions about your account
- Get a list of qualified medical expenses
To get started, go to the website and register as a new user.
If you would like to drop off a claim reimbursement request or speak with a customer service representative in person, you can stop by an Allegiance office between 8:00 a.m. and 5:00 p.m.
- Helena - 910 N Last Chance/Suite D
- Missoula - 2806 S Garfield
- Billings - 490 N 31st Street #110
Medical/Dependent Child Care FSAs Worksheets
These worksheets will help you decide on an appropriate annual election for a Medical & Dependent Care FSA. Estimate your total annual expenses for the plan year (January 1 - December 31) based on expenses to date and any additional expenses expected before December 31.
Your selected amount is deducted from your paychecks in 24 installments, first from any unused state contribution, and then from gross pay (before taxes) and deposited into your FSA. As you incur eligible expenses, you turn in a claim form and receive payment.
Contact Allegiance Flex Advantage
Allegiance Flex Advantage:
Phone: (866) 339-4310
Fax: (406) 523-3149 or (877) 424-3539
http://www.allegianceflexadvantage.com/
