Aug 10, 2005 12:02 PM
EDITOR’S NOTE: Flexible Spending Accounts are methods of paying for eligible expenses on a pre-tax basis. In response to queries from many members, we present the following Q&A.
The city’s Flexible Spending Accounts (FSA) Program include the Health Care Flexible Spending Account (HCFSA) program and the Dependent Care Assistance Program (DeCAP).
Social Security benefits may be slightly less as a result of participation in either of these FSAs. However, there is no effect on pension or TDA contributions or benefits.
Members can enroll in the FSA Program during the open enrollment period in the fall for the next plan year. However, members may be eligible to enroll in the FSA Program in the middle of the year if they incur a qualifying event. Generally, a qualifying event can be either a family or employment status change. Please refer to the FSA Program brochure through the city’s Web site at www.nyc.gov/ html/olr.
What dollar amount can members contribute to HCFSA?
The annual contribution is limited to a minimum of $260 and a maximum of $5,000 (including an annual administrative fee of $48).
Basically, any medical expense, such as dental, optical, or hearing, that is not covered by your insurance can be claimed for reimbursement. Also included are copayments, amounts applied to meeting deductibles and certain over-the-counter drugs. Members can refer to the FSA Program brochure for a more detailed listing.
The recipient must be eligible to be covered by your medical plan and must be either the participant, the participant’s spouse or an eligible dependent.
Claim forms are submitted once a month and each expense must be listed separately on the form. Members must also attach copies of receipts or billing statements from the medical provider as well as an Explanation of Benefits statement from the health insurance carrier or Welfare Fund, which shows the unreimbursed balance from your claim. The claim will be processed and a reimbursement check from your HCFSA account should be issued by the end of the month following the month of your claim submission.
Yes. The full amount of your election, reduced by any claims that have already been paid and the $48 administrative fee, is always available for reimbursement of eligible claims, regardless of the current balance in your account. Contributions are made on a monthly basis commencing in January and ending in December. If during March, for example, you submit a claim for $200 and your HCFSA balance is only $150, you will be reimbursed the entire amount of $200. Obviously you will be making contributions for nine more months, which will cover the amount paid and your account will be adjusted as contributions are made.
No, you cannot change or discontinue your annual contribution for any reason during the plan year.
Money not claimed in this account is forfeited if not used during the annual period. This is called the “Use It or Lose It” rule.
Members who choose to participate in HCFSA are cautioned to be very conservative in their planning. A review of their past annual health payments as well as consideration of future health concerns must be carefully considered. Account statements are sent to HCFSA participants on a quarterly basis.
For questions like this, members should contact their own financial advisors.
In this program, members contribute money to a DeCAP account, which will be used to reimburse participants for eligible dependent care expenses. These covered services, which are related to the care of one or more of your dependents, will allow you and your spouse to remain gainfully employed or go to school full time. The services can be performed within or outside your home during the period that you are at work and are traveling to and from work.
The minimum annual contribution is $500 and the maximum is $5,000 (including an annual administrative fee of $48). The $5,000 is reduced to $2,500 if you are married and file a separate federal income tax return (unless you are legally separated), or by the amount your spouse is contributing to a dependent care assistance program through his or her employer.
Further limitations on maximum contributions are placed if your spouse is a full-time student and if you or your spouse earns less than $5,000 a year. (Members should refer to the FSA Program brochure for further information, if they are in either of these categories). Account statements are sent on a monthly basis.
Benefits can be claimed for any dependent claimed on your tax return who is: a child of yours (son, daughter, stepson or stepdaughter) under the age of 13; any dependent who is physically or mentally incapable of caring for himself or herself and who regularly spends at least eight hours a day in your home (such as a dependent parent, a handicapped child of any age or an incapacitated spouse); any other dependent who is under the age of 13 and whose gross income for the plan year is less than the IRS maximum salary. In 2006 , the maximum was $3, 300. The 2007 exemption amount will not be less than the 200 6 amount. You may only claim expenses if you are the custodial parent of a dependent child and you cannot be reimbursed for any child support.;
Eligible employment-related services or qualifying day-care centers may be used for reimbursement. Eligible employment-related services may be performed by a qualifying caregiver who is: not your dependent (or anyone you can claim as a dependent; not your spouse; not your child or your spouse’s child, unless he or she has attained the age of 19 as of the close of the plan year in which services were provided. Licensed nursery schools, pre-schools, day camps (not overnight camps) and child-care centers, which provide day care, are considered qualifying day-care centers. Members should refer to the FSA Program brochure regarding the definition of a qualifying day-care center.
You must complete a claims form and have the dependent care provider sign and date the form and provide his or her name, address and federal tax ID or Social Security number. Reimbursement requests can be made on a monthly basis. However, unlike the HCFSA rules, participants will only receive reimbursement up to their current account balances.
Yes, members may increase, decrease, or terminate their annual contribution. However, they must experience a midyear qualifying event to do so. These events include: marriage, divorce, or annulment; birth or adoption of a child; death of a spouse or dependent; ineligibility of a dependent; start or termination of employment of participant or participant’s spouse; switching from part-time to full-time status or vice versa by participant or participant’s spouse; and taking an unpaid leave of absence by participant or participant’s spouse.
The same “U se it –or lLose it” rule applies as with HCFSA contributions. However, please note that the HCFSA grace period does not apply to DeCAP. A claims- run out period for DeCAP is provided in the event that a participant was unable to submit DeCAP claims incurred during the plan year. Members are once again cautioned to be conservative in their planning of contributions to their DeCAP account.
A brochure with program details is available from the City of New York. To request a brochure and for answers to other questions, members can either access the FSA Web site at www.nyc.gov/html/olr and choose “FSA programs”, or contact the FSA Administrative Office at 1-212-306-7760 between 9 a.m. and 5 p.m., Monday through Friday. Members can also contact the UFT Welfare Fund at 1-212-539-0500 and ask for an advisor on either HCFSA or DeCAP.