Flexible Spending Accounts
Save for medical and/or daycare expenses
No matter which medical plan you have, there’s an option for you to stash away some tax-advantaged funds for health expenses like copays, coinsurance, and prescription drugs; or daycare expenses.
In general, deciding to enroll in an Flexible Spending Account (FSA) is smart. Knowing which one to select and how to get the most out of it will take some education to decide which is the best fit for you. There are several key differences between each FSA, learn more about these accounts below to choose the one that’s the best fit for your needs.
Learn more about the FSAs, administered through Navia.
- There are three different types of FSAs: 1) daycare; 2) general purpose healthcare (medical, dental, and vision); and 3) limited purpose healthcare for those enrolled in an HSA (dental and vision only).
- Double tax-advantaged: You don’t pay federal taxes on the money you set aside, and you won’t pay taxes on withdrawals (for qualified expenses).
- The 2023 maximum allowed contribution to your general purpose or limited purpose healthcare FSA is $3,050. The maximum unused balance you may carry over to 2023 is $570.
- The maximum for the daycare FSA for all years is $5,000 per married couple filing jointly, or $2,500 if married and filing separately. There is no carryover feature for unused balances.
- There are three easy ways to file a claim:
IRS rules to keep in mind
- You must spend your funds on qualified medical, dental, and vision or daycare expenses. See what qualifies as an eligible expense and what does not.
- You must carefully project your annual spending because you can only roll over $570 of unused funds from the Healthcare FSA into the next year (from 2022 to 2023). There is no rollover for the Daycare FSA.
- Your enrollment is binding, which means you cannot change your contribution throughout the year unless you have a qualifying life event.
- If you have an HSA, you cannot also have a general-purpose healthcare FSA. However, you can have an HSA and a limited FSA covering just vision and dental. You may also use the limited FSA for medical and prescription expenses once you have satisfied your annual medical deductible.
Important note about contributions
Each year, ServiceNow must determine whether overall participation in the ServiceNow Dependent Care Spending Account Plan is appropriately balanced between “Highly Compensated” and “Non-Highly Compensated” employees according to IRS guidelines. From time to time, ServiceNow may be required to reduce the benefit elections for “Highly Compensated” employees to meet these IRS requirements and/or return excess contributions to our employees as regular income. Should this be the case, affected employees will be provided as much advance notice as possible. Any contributions that are returned are not subject to a penalty but are subject to payroll tax.