What Is The Health Care Flexible Spending Account Program?
This program allows an employee to elect a payroll deduction up to a maximum of $2,500 annually (effective calendar year 2013), which is not subject to Federal and State taxes. The advantage is tax savings - because this program uses pre-tax dollars for reimbursement of expenses not covered by insurance. You reduce your income taxes by reducing your taxable salary.
How Does The Plan Work?
Before the start of each plan year (01/01 – 12/31), you will be able to elect to have some of your upcoming wages paid to the plan. These amounts will be placed in a special “reimbursement account” which must be set up in order to pay for the benefit you have chosen. The portion of your pay that is deducted is not subject to Federal, State, and SDI taxes. During the course of the plan year, you may submit requests for reimbursement of medical expenses you have incurred. The administrator of this plan will provide you with forms for submitting reimbursement requests. Requests for reimbursement are processed within 72 hours, and a check will be sent to you.
What Expenses Qualify For This Program?
Some examples of allowable expenses are:
- Any medical, dental, vision, or other expense not covered by your insurance plans.
- Dental expenses which exceed covered benefits or are outside of plan coverage.
- Co-payments for doctor visits or prescription drugs, or deductibles required by your plan.
IRS regulations prohibit participants to pay for any type or portion of insurance premiums with Flexible Spending Account pre-tax dollars.
When Do I Make An Election For This Plan?
You must elect to participate in this plan within 30 days of your date of hire, within 30 days of a qualifying event, or during the annual open enrollment period, normally during the month of November. IRS regulations require that employees participating in this plan must re-elect each calendar year. If you do not re-elect during the normal open enrollment period each year, then you will be required to wait until the next open enrollment period to participate in this program. Election of this program is for the entire calendar year.
May I Change My Elections During The Plan Year?
Generally, you cannot change your election once the plan year has begun, except where IRS regulations allow. IRS regulations allow for changes in election during the plan year under certain qualifying events.
Is There A Fee For This Plan?
The employee is required to pay an after-tax fee of $3.00 per payperiod. This fee is subject to change each plan year.
What Happens If I Don’t Spend All My Plan Contributions?
Any monies left in your reimbursement account at the end of the plan year will be forfeited. Qualifying expenses that you incur late in the plan year will be paid before any amount is forfeited; however, you must make your request for reimbursement no later than 90 days after the end of the plan year. Because you could forfeit amounts in your account, it is very important that you decide CAREFULLY AND CONSERVATIVELY how much to contribute for the plan year.