Health Flexible Spending Account FAQ
What are the benefits of participating in the HFSA?
You are in control. You make the decision to participate how much to contribute to your HFSA account, up to $2,550 per year.
Saves you money. Contributions to the plan are deducted from your paycheck before taxes. That means you will not pay taxes on the amount of money you deposit into your HFSA. That lowers your taxable income.
Manage your money. Now you can have money that has been set up to pay for health-care expenses that are not paid by your insurance plans. This helps you better manage your money and budget.
Tax-free withdrawals. Withdrawals are tax free if you use the money to pay qualified medical expenses.
Interest-free loans. You can withdraw funds from the account to pay qualified medical expenses even if you have not yet placed the funds in the account. When you use the plan this way, it’s like getting an interest-free loan for your out-of-pocket health-care expenses.
What’s in it for the city?
There are tax advantages for you to participate, and there are tax advantages for the city. You win by reducing your taxable income. The city benefits by reducing the amount of FICA tax it contributes on your behalf. We’re both SMART.
Can I put money in this plan for my spouse and dependent children’s out-of-pocket health-care expenses?
Yes. You may request reimbursement for your own eligible expenses as well as your spouse’s, if you file a joint tax return. Expenses for a dependent child are eligible for reimbursement if you claim the dependent on your federal income-tax return, the dependent lives with you, and you provide more than half of the dependent’s support. You or your dependents do not need to be covered by the city’s medical or dental plans to participate in the HFSA.
What if I change my mind during the year?
You will have to decide how much to contribute to this plan during open enrollment. Once you make your election for the year, you cannot increase or decrease your contribution until open enrollment next year. The only exception to this rule is if you have a family-status change.Do I have to wait until my contribution is deducted from my paycheck before I can file a claim for reimbursement?
No. You can incur or file a claim for reimbursement up to the total amount you have elected for the year at any time after the beginning of the plan year, even if the money is not yet in your account. This is one of the best benefits of the HFSA.
What happens if I have money left over at the end of the year?
Up to $500 will be automatically rolledover into the next plan year. Anything over $500 will be forfieted.
What if I overestimated my expenses and can’t get to my dentist before April 30?
If you find that you have overestimated your health-care expenses for the year, there are many ways to use the money in your account before the plan year ends April 30. Remember, vision expenses such as an extra pair of glasses or contact lenses, are eligible expenses. So, it is rare that anyone leaves money in the account. Also, you can rollover $500 into the next plan year. This is an automatic process, there are no forms to fill out. But anything left in your account over $500 will be forfieted. If you choose not to re-enroll for the next plan year, the carryover amount minimum is $50 and the maximum is $500. The minimum amount does not apply if re-enrolling. Carryover amounts can only be carried over one plan year without re-enrollment.
Does the rollover amount affect how much I can elect for the plan year?
No. You can still elect to put the maximum of $2,550 into your account even if you rollover any from the previous plan year. For example, you have $500 leftover and it rolls over into the new plan year. Then you elect to put $2,550 in your account for the plan year - your total account about would be $3,050.
What is the difference between the Healthcare Flexible Spending Account and the Dependent Care Reimbursement Plan?
At first glance, the Healthcare Flexible Spending Account and the Dependent Care Reimbursement Plan look similar. Both save you money in taxes; both are flexible spending accounts as defined by the IRS; and both are administered by WageWorks.
However, these two benefits are separate plans, designed for two different purposes. The HFSA is a pretax account for health-care expenses incurred by you and your family. The Dependent Care Reimbursement Plan is a pretax account for dependent daycare expenses. The DCRP will not reimburse you for health-care expenses, even if they are for your dependents.
Can I transfer money from my Dependent Care Reimbursement Plan to the HFSA?
No. While there are many similarities between the HFSA and the Dependent Care Reimbursement Plan, they are separate plans, and money cannot be transferred from one to the other, even if you made a mistake by electing the wrong plan. So, please be careful when enrolling in these reimbursement programs. Be sure that you are enrolling in the intended benefit plan.
If I terminate employment during the plan year before April 30, may I continue to participate?
Participation after termination requires election of COBRA continuation coverage. COBRA also applies to dependents losing eligibility as a result of a family-status change.
Will my pension benefit be affected by my participation in the HFSA?
No. Your city pension is calculated on your “base pay” prior to the HFSA deduction. Your retirement benefit from Social Security is calculated on your taxable earnings, meaning the lower amount.
What if I leave my job with the city? Can I get the balance left in my account?
Yes, if you have incurred eligible expenses and claim them in the proper time period. Your HFSA benefit ends on your last day of employment with the city. You will only be able to make claims on expenses that you have incurred prior to your last day of employment. Your deductions stop with your last paycheck unless you elect COBRA.
When do I have to file a claim?
Claims must be filed within 90 days of plan-year end, unless you cease to participate before April 30. In that case, you must file your claim within 90 days after your participation ends. All claims must be incurred while you are a participant.
Will WageWorks reimburse me for every claim I submit?
Reimbursement is based on your annual election, amount previously reimbursed, proper documentation, and eligibility of the expense. If your claim is denied, WageWorks will provide a specific reason in writing.
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