Tuition evidencing separate breakdown for medical expenses: FSA Eligibility

Tuition evidencing separate breakdown for medical expenses is eligible for reimbursement with a flexible spending account (FSA), health savings account (HSA), or a health reimbursement arrangement (HRA). Tuition evidencing separate breakdown for medical expenses is not eligible with a dependent care flexible spending account (DCFSA), or a limited care flexible spending account (LCFSA).

What is tuition evidencing separate breakdown for medical expenses?

Tuition normally isn't eligible for reimbursement with a consumer-directed healthcare account, but if there are clearly outlined medical expenses within the tuition costs, then those medical expenses may be considered eligible for reimbursement with a consumer-directed healthcare account. Lump-sum tuition fees should have an accounting letter or statement that shows what portions of the overall tuition costs went to various expenses, including medical expenses. The most common medical expenses that may be rolled into tuition expenses are health plans.

The charges for a health plan included in a lump-sum tuition fee can be eligible for reimbursement if the charges are separately stated or can easily be obtained from the school.

What is tuition?

Tuition reimbursement, also known as tuition assistance, is a generous employee benefit that outlines specific terms in which employers will cover a portion of an employee's continuing education expenses. These contractual arrangements often have strict policies that outline how much an employer will pay and how these funds will be dispersed over a given amount of time. For instance, a company may choose to contribute a set amount for degree/certificate programs, while opting for a separate allocation for an associate's degree or other personal development coursework.

Companies can also structure tuition reimbursement based on the employee's success in the courses. For instance, companies may pay for courses or degree programs at the moment of registration, or conversely, some may withhold reimbursement until the successful completion of required coursework or maintaining a certain grade point average. Additionally, some companies may require that courses eligible for tuition reimbursement be "work-related." Employers may rule that some courses will only be reimbursed if it relates to the job that an employee is currently performing, while others may choose to fund further professional development to prepare workers for future positions.

In the past, tuition reimbursement was treated as taxable income for the employee, but sweeping Congressional changes in the late 1990s and 2000s altered what is considered qualified education expenses. Currently, the only qualified education expenses are those that are paid by the worker and his/her spouse that file a joint return, a student that is claimed as a dependent on the worker's return or a third party including relatives or friends. Employer contributions are no longer considered taxable income, but in some cases, if a course is not job-related, some employers will consider this a taxable benefit and the relevant amount will be withheld from the worker's reimbursement.

While tuition reimbursement is not typically not eligible for reimbursement through a consumer spending account, if the tuition is for a program that is required for the treatment of a medical condition, it would be eligible with a Letter of Medical Necessity from a physician.

Eligibility Table

Flexible Spending Account (FSA) Limited Care FSA Dependent Care FSA Health Savings Account (HSA) Health Reimbursement Account (HRA)

Eligible

Eligible with Rx

Eligible with LMN

Not Eligible

 


AZ-PROD-WEB02 11/21/2017 8:50:42 PM