FSA
IRS Maximum FSA Contribution Limits
| 2024 | 2025 | |
|---|---|---|
| Unreimbursed Medical Spending (Maximum) | $3,200 | $3,300 |
| Dependent Care Spending (Household Maximum) | $5,000 | $5,000 |
IRS Compensation Levels
The indexed compensation levels for determining who is highly compensated or a key employee are as follows.
| 2023 | 2024 | 2025 | |
|---|---|---|---|
| Highly Compensated Employee | $150,000 | $155,000 | $160,000 |
| Top Paid Group of 20% | $150,000 | $155,000 | $160,000 |
| Key Employee, Officer | $215,000 | $220,000 | $230,000 |
Need a copy of your Employer's plan FACT SHEET?
FSA Documents & Forms
When filing your claim, you must attach copies of the itemized statements/EOB (Explanation of Benefits). The document must include the service provider's name, the service rendered date and type of service(s) for each expense. Canceled checks, credit card slips, or statements of balance due are NOT ACCEPTABLE.
Health/Limited FSA Reimbursement Claim Form
Dependent Care Spending Account Reimbursement Claim Form
Debit Card Substantiation Claim Form
Letter of Medical Necessity
Section 125 Plan Design
Business Associates Agreement
POP (Premium Only Plan Design)
Section 125 Brochure
Section 125 Benefits Enrollment Form
Section 125 Benefits Enrollment Form – Spanish Version
Section 125 Limited Benefits Enrollment Form
Dependent Information Setup Form
Change in Status
FSA COBRA Notice & Election Form
Personal Information Change Form
Direct Deposit Form
Don't forget - You can submit your debit card substantiation and/or request reimbursement for out-of-pocket expenses, using your Mobile device.
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Unreimbursed Medical Spending
The Health Care Flexible Spending Account (HCFSA) is an IRS- approved, tax-exempt account that saves you valuable tax dollars on eligible medical, dental, vision, prescription and prescribed over-the-counter expenses. When you join, you choose to contribute a set amount to your HCFSA through payroll deduction on a pre-tax basis. This means it is an amount deducted from your gross pay before federal income, Social Security, and Medicare taxes are calculated.
This account can benefit almost all eligible employees, their spouses, children and dependents. You never have to pay taxes on the money you receive from your HCFSA account for qualified expenses. It will be a permanent tax savings, which helps your health care dollars, go further. Insurance premiums are NOT reimbursable through the HCFSA.
Click here for a list of FSA Eligible Expenses
How It Works
Here's an example of how a typical employee's take-home pay will increase as a result of participating in the take care® plan. An employee makes $2,000 each month and decides to participate in her employer's plan. She pays her insurance premiums and health and day care expenses through the plan with tax-free dollars -- and she saves $100 each month!
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After you've decided how much money you want to set aside on each paycheck and how you want to spend it, enroll in the plan. Then when you're ready to use the money in your flex account, simply swipe your take care Visa flex benefits card for qualified expenses, money is instantly deducted from your flex benefit account. You won't have to reach into your pocket to pay for qualified expenses, file a claim and then wait to get reimbursed. If your provider does not accept Visa, you may pay your provider directly, then submit a receipt and wait for a reimbursement check or have the money deposited directly into your bank account.
The Health Care Flexible Spending Account (HCFSA) is an IRS- approved, tax-exempt account that saves you valuable tax dollars on eligible medical, dental, vision, prescription and prescribed over-the-counter expenses. When you join, you choose to contribute a set amount to your HCFSA through payroll deduction on a pre-tax basis. This means it is an amount deducted from your gross pay before federal income, Social Security, and Medicare taxes are calculated. This account can benefit almost all eligible employees, their spouses, children and dependents. You never have to pay taxes on the money you receive from your HCFSA account for qualified expenses. It will be a permanent tax savings, which helps your health care dollars, go further. Insurance premiums are NOT reimbursable through the HCFSA.
Enrollment Limitations
Current HCFSA participants MUST re-enroll in the plan each year in order to continue participation. You may contact your HR/Benefits department to see when your company holds their annual open enrollment.
New hires that are eligible to enroll in an FSA must do so within 31 days from when they become eligible with their employer. You may contact your HR/Benefits department to see your company's policy of eligibility. Funds are available for those claims incurred after the account is set up.
Current HCFSA participants who encounter a qualified life event* may enroll in an FSA if not already enrolled or increase their election. Funds are available for those claims after the account is set up. The election must be done within 31 days from the date of the qualifying event or the participant will be required to wait until their company's annual open enrollment period.
*Qualified Life event that allows medical plan change are, but not limited to marriage, birth or adoption, divorce, death or change in residence.
Dependent Care Spending Accounts
Some employees who have children under the age of 13, pay dependent care expenses. Your employees pay these expenses to ensure during working hours, their children get the attention and care they need. For dependent care expenses, it can provide more tax advantage than the federal income tax credit. Dependent Care expenses include day care, day camp, before-and-after-school care, and nursery or preschool.
Employees save 25% to 40% on the cost of daycare for children with take care.
- Employees set aside pre-tax payroll deductions in this take care account to budget for the day care expenses of a dependent child under age 13.
- Qualified expenses include nannies, babysitters, housekeepers, nurse's fees, and registration fees to a day care facility. The cost of pre-K or nursery school, before and after school care, and day camp also qualify. To qualify, expenses paid for day care must allow an employee or the employee's spouse (if they are married) to work or look for employment.
- The IRS also offers employees the option of saving for day care with a credit that the employee can take on Form 1040.
Find out who is considered a qualified dependent. Click here to take a Qualifying Relative Test.
| Contribution Limit into Daycare Account | |
|---|---|
| Married couple filing a joint return | $5,000.00 |
| Single parent filing as "Head of Household" | $5,000.00 |
| Married couple filing separate returns | $2,500.00 |
| Daycare Expense Tax Credit Limit | |
| For one child | $3,000.00 |
| For two or more children | $6,000.00 |
Day care expenses must be filed on Form 2441.
Form 2441 should then be attached to Form 1040.
If a parent decides to take advantage of their employer's plan, the amount they are eligible to receive from the day care tax credit is decreased. The reduction is commensurate to the amount budgeted for the plan. An employee is still able to both participate in their employer's plan and also use a portion of the daycare expense tax credit. This is possible only if an employee spends more on day care expenses than the amount apportioned annually for their take care plan while spending less than the tax credit limit. The amount left over is what they may claim through the tax credit.
Click here for Regulations on Dependent Care Expenses
An example: An employee has two children and budgeted out $3,000 annually to spend through her employer's daycare account. She ends up spending $5,000 on daycare related costs during the year. She may claim the amount not covered through her take care plan: $2,000.
Extenuating Circumstances
If one of the parents is going to school full-time or is incapable of self-care, the non-working spouse would be "deemed" as earning $250 per month for one qualifying child and $500 for two or more qualifying children. This "deemed" earned income is to be used whether a person is using the employer's plan or taking the day care credit.
Disclaimer: All services may not be available under your current plan offered through your employer. Please check with your employer to see which plan you have.
Dependent Care Credit vs. Dependent Care FSA - 2025
- Single, Head of Household - 1 Dependent, $3,000 Day Care Expenses
- Single, Head of Household - 1 Dependent, $5,000 Day Care Expenses
- Single, Head of Household - 2 Dependents, $6,000 Day Care Expenses
- Married, Filing Joint - 1 Dependent, $3,000 Day Care Expenses
- Married, Filing Joint - 1 Dependent, $5,000 Day Care Expenses
- Married, Filing Joint - 2 Dependents, $6,000 Day Care Expense
Elder Care & Adult Care
Employees will save 25% to 40% on the cost of day care for elders and disabled adult dependents with take care.
- Employees set aside pre-tax payroll deductions in this take care account to budget for the day care expenses of a dependent adult who cannot physically or mentally care for themselves.
- Qualified expenses include housekeeper and nurse's fees for services provided inside your home. Expenses are eligible to the extent they are attributable to adult care and incidental household services. Day care expenses for services outside your home also qualify, if they are for the care of a dependent that regularly spends at least 8 hours per day in your home. To qualify, expenses paid for day care must allow an employee or the employee's spouse (if they are married) to work or look for employment.
- The IRS also offers employees the option of saving for day care with a credit that the employee can take on Form 1040
Find out who is considered a qualified dependent. Click here to take a Qualifying Relative Test.
Adoption Assistance Accounts
The take care® adoption account option is for expenses paid in connection with adopting a qualified child.
- Employees set aside pre-tax payroll deductions to pay qualified expenses, including home study and application fees, reasonable and necessary legal adoption fees, court costs, attorney fees, agency fees, medical services and counseling, travel and lodging fees, and other expenses which are directly related to, and the principal purpose of which is for a legal adoption.
- Adoption expenses that qualify for payment must be for an individual who has not attained the age of 18 at the time of the adoption, a child that is physically or mentally incapable of caring for himself, a child with special needs who cannot or should not be returned to the home of his or her parents and a specific factor or condition makes it reasonable to conclude that the child cannot be placed with adoptive parents unless assistance is provided as determined by a state. The child must be a U.S. citizen or resident.
Tax Information:
Participants will save on federal and state taxes where applicable through the take care adoption account but will not save FICA (Social Security and Medicare).
| Tax Benefit | 2025 |
|---|---|
| Adoption Credit | |
| This non-refundable credit starts to phase out at $214,520 of Modified Adjusted Gross Income (AGI) levels, and is completely phased out when modified AGI reaches $254,520. | |
| Adoption Credit through Section 125 Cafeteria Plan | |
| A participant may take the exclusion from income and the tax credit if enough expenses are incurred to support both platforms. | $17,280.00 |
Employees that expect to pay more than the annual limit for an adoption have the option of utilizing both a tax credit on Form 1040 and using the take care adoption account to pay for additional expenses.
Premium Only Plans
The premium only plan option helps employees save up to 40% on every dollar they contribute to your health plan.
- The Section 125 Premium Only Plan (POP) saves you and your employees by reducing payroll taxes. It works by making one simple adjustment in your payroll process: Employees pay their portion of insurance premiums on a pre-tax basis.
- Qualifying premiums may include an employee's share of employer-sponsored health, dental, disability, accident, and group-term life insurance.
- The take care POP cuts your taxable payroll by reducing your employee's taxable income. So, both you and your employees pay less in taxes.
| Employee savings with take care® | ||
|---|---|---|
| John Doe: single, no exemptions | Without POP | With POP |
| Annual salary | $30,000 | $30,000 |
| Pre-tax health plan contributions | $0 | $-2,400 |
| Taxable income | $30,000 | $27,600 |
| Estimated taxes (28.65%) | $-9,195 | $-8,460 |
| After-tax health plan contributions | $-2,400 | $0 |
| Net take-home pay | $18,405 | $19,140 |
| Increase in take-home pay | $0 | $735 |
- Annual health plan contributions by employee are based on a monthly premium of $200.
- Estimated taxes (28.65%) based on an average 20% federal, 5.65% FICA, and 3% state tax rates (where applicable).
Note: Social security benefits at retirement could be affected.
Example of POP Employer Savings
| Employer savings with take care | ||
|---|---|---|
| XYZ Company has 10 employees | Without POP | With POP |
| Annual payroll | $300,000 | $300,000 |
| Annual pre-tax payroll deduction | $0 | $- 24,000 |
| Taxable payroll | $300,000 | $276,000 |
| Annual social security tax | $22,950 | $21,114 |
|
Total annual employer social security tax savings |
$0 | $1,836 |
- Annual pre-tax payroll deductions are based on insurance premiums averaging $200 per month per employee.
- Annual social security tax is based on tax rate of 7.65%.
FAQ's
A. If you did not use your CPNFLEX card and need reimbursed for a qualified expense you paid out-of-pocket, you may submit a claim to CPN for reimbursement. You will need to obtain an itemized statement or EOB (Explanation of Benefits), showing the dates of service, services rendered, and amount you paid. Once you obtain this document, you may send to CPN along with a completed Flexible Spending Reimbursement Claim Form provided at the top of this page. Listed at the bottom of the FSA claim form are several methods of how you may send your information to CPN.
Dependent Care is not linked to the flex card. You may submit these expenses by completing/submitting the Dependent Care Spending Account Reimbursement Claim Form for Dependent Care reimbursement services.
A. Claim reimbursement payments are done by Check if the participant does not have Direct Deposit.
Remember to complete all required information and sign your FSA claim form. Unsigned claim forms will not be processed which will delay your reimbursement.
Direct DepositIf you are not already set up for Direct Deposit, you may print, complete and return the Direct Deposit form provided at the top of this page.
If you change banks or switch accounts, please complete a brand new form and send to CPN as soon as possible to ensure your claim is deposited to the correct account.
A. If you or your spouse has an H.S.A., you cannot enroll in a General Purpose FSA. However, if your employer offers a "Limited" FSA plan, you may elect to enroll in this benefit. "Limited" FSA plans are designed to work alongside the H.S.A., which allow pre-tax funds to be used for Dental and Vision expenses ONLY. **Consult your HR/Benefits department to see if you employer offers this benefit.
A. Under IRS regulations, if you do not use all your Medical FSA plan year funds, it must be forfeited. Therefore, you should estimate cautiously when setting aside money you feel certain you will spend on your health care expenses during your plan year.
Your company may allow a 2 ½ month extension or a Carryover on your FSA plan (Check your employer's Summary Plan Document for more information).
A. 2 ½ month extension:
If offered, the IRS permits a "grace period" of two months and 15 days after a plan year ends, any remaining Medical FSA funds left on a prior FSA plan year, to pay first. Click here for more information.
If offered, up to a certain allowed amount of unused Medical FSA dollars left in a previous plan year can be carried over to the next plan year. Participants must be an active employee at the time their previous plan year ends to receive carryover funds to the next plan year. Carryover funds are NOT subject to COBRA. If an employee has carryover funds left, but does not enroll in the next plan year, they will still receive those unused FSA dollars carried over to use for next year's dates of service.
*Not all employers offer this option. Please refer to your employer to see if they offer this provision and what elected amount they allow to carryover.
A. If you cannot locate your SPD (Summary Plan Document), and CPN produced your company's SPD, you may obtain a copy located on your Employer Portal > Tools > Resources. If your SPD is not shown, email Dorothy Lane (dorothy@cpnflex.com) to request a copy.
A: As a business owner, the IRS states you can't contribute to an FSA plan if you own 2% or more of the company and are an LLC, PC, sole proprietor, partner, or have a schedule S corporation. If you own a C-corporation, however, you may participant in an FSA plan because the IRS considers you a W-2 common law employee.
Please reference IRS Publication 15-B for more information
A: Sorry, your domestic partner's medical expenses cannot be reimbursed under your Healthcare FSA, according to current IRS Regulations. You must be legally married to use your Healthcare FSA to pay for your spouse's healthcare expenses. A "qualifying" spouse must be legally married. A domestic partner is not considered a spouse under federal law.