As medical, drug and child care costs continue to spiral upward, please note that the City’s Health Care Flexible Spending Account (HCFSA) Program and the Dependent Care Assistance Program (DeCAP) can help defray some of those increased costs.
Health Care Flexible Spending Account (HCFSA) Program
When enrolling in the HCFSA Program, participants elect an annual goal amount, or yearly contribution amount, and deductions are withheld from the participant’s paychecks throughout the year 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. The money you contribute into your HCFSA is used to reimburse you for eligible health care expenses, including co-payments and amounts applied to meeting your deductible, medical expenses not covered by your health insurance, and dental, optical or hearing services not covered by your Welfare Fund (union) coverage.
Also eligible for reimbursement are over-the-counter (OTC) drugs that are medically necessary to diagnose, cure, mitigate, treat or prevent a disease or medical condition. However, you must obtain a prescription from your doctor for these OTC drugs. Cosmetic items, such as sundries and toiletries, are not eligible.
Here is how the HCFSA Program works:
First, you contribute before-tax dollars into your HCFSA account via automatic payroll deductions.
Next, in order to receive reimbursement, you must complete and submit an HCFSA program claim form with the following documentation for your non-reimbursed expenses: a receipt from your provider and an Explanation of Benefits (EOB) statement from your health insurance carrier(s) for any medical expenses, as well as an EOB statement for any dental, optical or hearing aid expenses that are not covered by your Welfare Fund (union) coverage.
Once your claim(s) are approved, you will receive a reimbursement check from your HCFSA, or you may elect to receive reimbursement via direct deposit. The amount of your reimbursement is free of federal and FICA taxes.
Enrollment in the HCFSA Program is not automatic. Re-enrollment is required each year by completing an FSA Program Enrollment/Change Form during the annual Open Enrollment Period — it will be from Oct. 1, 2019, through Nov. 15, 2019, for Plan Year 2020. The Plan Year begins on Jan. 1 and runs through Dec. 31 of each year.
The annual contribution amount is limited to a minimum of $260 and a maximum of $2,650 (including an annual administrative fee no greater than $48).
Claims for OTC drugs must include itemized receipts showing the dates of purchase, drug names and amounts paid, and they must be accompanied by a prescription from your doctor (except for insulin). In certain situations, the HCFSA program may require additional information or documentation.
It is important that you estimate your annual expenses very carefully prior to electing a goal amount for each Plan Year. As mandated by the Internal Revenue Service, money that is not used for reimbursement by the end of the Plan Year, or the end of the Grace Period, is forfeited and cannot be carried forward to the following Plan Year. This is known as the “Use It or Lose It” rule. However, if you have a remaining balance in your Plan Year 2019 account, there is an HCFSA Grace Period during which you may submit claims for eligible expenses incurred from Jan. 1, 2020, through March 15, 2020, using any money remaining in your 2019 account.
Dependent Care Assistance Program (DeCAP)
DeCAP is a tax savings, payroll deduction program through which you may submit claims for reimbursement for child care services such as babysitting and summer day camp, or for the cost of caring for an elderly parent who spends at least half of the year living in your home. You may elect a goal amount between $500 and $5,000 per year to be taken from your paycheck free of federal and Social Security taxes for dependent care.
As mandated by the Internal Revenue Service, money that is not used for reimbursement by the end of the Plan Year or Run-Out Period is forfeited and cannot be carried forward to the following Plan Year. This is known as the “Use It or Lose It” rule. Please note that DeCAP does not have a Grace Period.
Detailed information and enrollment or claim forms may be accessed at the FSA Program website, or you may contact the FSA program at 212-306-7760.