The District offers two special tax-savings accounts to eligible employees:

• Health care flexible spending account
• Dependent day care flexible spending account

Flexible spending accounts are voluntary plans that enable you to save money by paying for certain health care and dependent day care expenses using tax-free pay. Each year you may contribute from $120 to $5,000 per family to the Health Care FSA, and from $120 to $5,000 per family to the Dependent Day Care FSA.* Your annual contribution election must be made in a $120 increment. Your contribution will be deducted before taxes are taken out of your paycheck.

Enrollment is not automatic. Employees who wish to re-enroll in a flexible spending account must re-enroll each year during Open Enrollment to be effective the following year.

* If you are married and file a separate tax return, your maximum annual contribution to the Dependent Day Care Spending Account may be less. See the Flexible Spending Account brochure for details.

NOTE: Because the IRS does not generally consider domestic partners, and their children, to be dependents, FSAs cannot be used to pay for expenses incurred on behalf of these individuals. However, if you have adopted your partner's child, or assumed legal guardianship, you may use the FSAs for expenses incurred on the child's behalf.

Important Reminder

On May 18, 2005, the Internal Revenue Service (IRS) announced that a Flexible Spending Account (FSA), including FSA Health Care and Dependent Care Spending Accounts, can now reimburse expenses incurred during the first 2 1/2 months of any plan year, using money left over from the prior plan year.

Your Medical and Dependent Care Spending Accounts will be changed in two important ways:

• You will be able to get reimbursed for 2010 claims incurred anytime from January 1, 2010, to March 15, 2011. This means you have a new extension period of up to 2 1/2 months to spend the money in your account.
• You will also have additional time to submit these claims for reimbursement; claims submitted up to June 15, 2011 will be paid from any remaining 2010 funds.
• Participants that terminated mid-year or before 12/31/10, have a grace date of 3/31/11 (90 days after end of the plan year).  

These changes will also be in effect for the 2011 plan year.

• The FSA Plan year runs on a calendar year basis, from January 1st to December 31st. Eligible expenses incurred during the calendar year and the first 2 1/2 month extension period of the next year, can be reimbursed. This means that you can incur expenses through March 15th of the year following the current plan year. If you stop participating in the FSAs before December 31st, expenses incurred after the date participation stops are not eligible.
• "Use it or lose it." Any money remaining in your accounts after the calendar year and the 2 1/2 month extension period has ended (March 15th of the year following the current calendar year) must be forfeited. Estimate future expenses carefully to protect yourself against forfeitures. Focus only on anticipated expenses. In other words, setting money aside for an emergency room visit would not be the best example of a planned health care expense.
• Money in one FSA cannot be transferred to another FSA.
• Unused FSA balances cannot be forwarded to the next Calendar year.

Finally, you should be aware that your participation in the FSAs may slightly reduce your future Social Security benefits