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Health Savings Account (HSA)

You are eligible to open an HSA if you are covered by an HSA-qualified High Deductible Health Plan
(HDHP).

In addition, you cannot be:

a. Covered by a spouse’s non-qualified medical plan or a Health Care FSA by you or your spouse;
b. Enrolled in Medicaid, Medicare, or Tricare;

c. Eligible to be claimed on another person’s tax return.

HSA funds may be used to pay for any “qualified medical expense” permitted under federal tax law.
This includes most medical, dental and vision care for yourself, your spouse, and/or your tax
dependent children. Funds cannot be used for children who are no longer IRS tax dependents, even
if they are covered under your medical plan. Funds used for non-qualified medical expenses are
taxable as income and are subject to a 20% tax penalty.

Flexible Spending Account (FSA)
FSAs allow you to reduce your taxable income by setting aside pre-tax dollars to pay for qualified
health and dependent care expenses.

Note: If you have a Health Savings Account, you are not eligible to participate in the Health Care FSA,
but may participate in the Dependent Care FSA.

Healthcare FSA

The Healthcare FSA allows you to contribute a maximum of $2,550 to pay for medical expenses not
covered by health insurance such as deductibles, copays, coinsurance, orthodontia, and glasses.
Please refer to the current year’s Summary of Employee Benefits for a listing details of qualified
expenses.

Dependent Care FSA

The Dependent Care FSA allows you to contribute a maximum of $5,000 or $2,500 if you are married
filing separately. You can use this account to pay for expenses associated with the care of children
under the age of 13 or for a disabled spouse or parent while you work. The account can be used for
daycare, preschool, after school care, summer day camp or elder care.

FSA Plan Year

Expenses must be incurred during the Plan Year. Under the Health Care FSA, you may carry over up to
$500 in remaining funds. All other remaining funds will be forfeited. Changes to your contribution
elections are not permitted unless you have a qualified life status change. Employees should keep a
copy of all FSA receipts and documentation in the event of an IRS audit. Please refer to the current
year’s Summary of Employee Benefits for a listing of details and qualified expenses.

POLICE FEDERAL CREDIT UNION EMPLOYEE MANUAL - APRIL 2017 82 | PAGE