Oct 1, 2009 5:09 PM
As medical and drug costs continue to spiral upward, even for UFT members whose health coverage is among the least expensive in the country, renewed attention is being focused on the city’s Health Care Flexible Spending Account (HCFSA) Program, which can help defray some of those increased costs.
When enrolling in the HCFSA Program, members determine an annual goal amount, or yearly contribution amount, and deductions will be withheld from members’ paychecks in order to meet that goal amount. By enrolling in HCFSA, you not only plan for anticipated health care expenses, but also reduce your gross salary for federal and Social Security tax purposes. The end result is that you save on taxes.
Then, this money is used to reimburse you for eligible health care expenses, including co-payments and amounts applied to meeting deductibles, and for such services as dental, optical or hearing that are not covered by your health insurance or the Welfare Fund. Also included are over-the-counter (OTC) drugs that are necessary to diagnose, cure, mitigate, treat or prevent a disease or ailment.
Here is how the HCFSA Program works:
First, you put before-tax salary into your HCFSA. The amount you choose becomes an automatic payroll deduction.
Next, in order to receive reimbursement, you submit proof of any nonreimbursed expenses you incurred. That includes a claims form, receipt from your provider and an Explanation of Benefits (EOB) statement from your health insurance carrier(s) as well as proof of any dental, optical or hearing aid expenses that exceeded your Welfare Fund coverage.
Once approved, you will receive a check from your HCFSA. The amount of your reimbursement is free of federal and FICA taxes.
Enrollment is not automatic. You must re-enroll each year during the annual open enrollment period — this year from Sept. 21 to Nov. 13 for plan year 2010. The plan becomes effective on Jan. 1 and runs through Dec. 31.
The annual contribution is limited to a minimum of $260 and a maximum of $5,000 (including an annual administrative fee of $48).
Claims for OTC drugs must include itemized receipts showing the dates of purchase, drug name and amounts paid. In certain situations the HCFSA Program may require additional information or documentation.
Detailed information and enrollment or claim forms may be accessed at the HCFSA Program Web site. Or, members may call 1-212-306-7760. They can also request the Plan Year 2010 FSA Program Enrollment/Change Form from their school secretary.
It is important that members estimate their annual expenses very carefully. As mandated by the Internal Revenue Service, money that is not used for reimbursement by the end of the calendar year (plan year) is forfeited and cannot be carried forward. This is known as the “use or lose” rule. However, if you have a remaining balance in your plan year 2010 account, there is a HCFSA grace period that allows submission of claims for eligible medical expenses incurred from January 1, 2011 through March 15, 2011.
A Flexible Spending Program Q&A on the Welfare Fund Web site, gives specific details of the program.