You asked for it - a SMART new way to save money

Last year we introduced a Healthcare Flexible Spending Account and 691 employees took advantage of this money-saving benefit contributing more than $458,000. With the HFSA benefit you save money for out-of-pocket medical, prescription, dental and vision expenses incurred by you and your family. Use this guide to learn how this pretax benefit can lower your family’s tax bill.

	What is the new HFSA?
	SMART facts, at a glance
	What expenses are reimbursable?
	Why should I participate in this benefit?
	OK, I'm curious. How does this work?
	Who is eligible for this benefit?
	Why is HFSA a SMART choice for most employees?
		Example of tax savings in the HFSA
	How much can I put in my HFSA?

What is the HFSA?

The HFSA is a voluntary pretax benefit plan that allows you to set aside money from your paycheck to be used to pay for out-of-pocket medical, prescription, dental and vision expenses. The money you contribute into the HFSA comes out of your paycheck before taxes, and you do not pay taxes on the reimbursements you receive for qualified health care expenses.

SMART facts, at a glance

About Your HFSA

	Minimum contribution = $120 a year/$5 per pay period
	Maximum contribution = $1,000 a year/$41.67 per pay period
	Plan year is May through April
	Incur claims May 1 through April 30
	File claims for 90 days beyond plan year, through July 29
	Claim administrator is FLEXONE
	Minimum claim reimbursement is $10

What expenses are reimbursable?

Because you never pay taxes on this money, you can save up to 35 percent in federal taxes on the amount that you put into your HFSA. The amount you save will vary depending upon your individual income tax bracket. See Example of Tax Savings in the HFSA .

Why should I participate in this benefit?

If you’re like most of us, you and your family will have health care expenses in the next 12 months. Your medical and dental plans will pay the majority of those expenses. But what about the part that isn’t covered, like copayments? Your HFSA will reimburse you for those expenses and may help you save tax dollars on these out-of-pocket expenses.

		What do you spend? Your prescription drug copayments are reimbursable under the HFSA. Copayments for mail-order prescription drugs are covered, too. You can also be reimbursed for over-the-counter items like aspirin, cold/flu medicines or remedies for the stomach.

OK, I’m curious. How does this work?

1. You determine how much money you want to contribute to your account for the plan year, which runs May 1 - April 30.
2. This amount is then deducted in 24 equal deductions from each paycheck BEFORE taxes are calculated.
3. The per-pay-period deduction is credited to your personal reimbursement account.
4. You incur eligible expenses during the plan year through April.
5. Throughout the year, you submit claims to FLEXONE.
6. FLEXONE processes each claim for reimbursement.
7. You are eligible to receive reimbursement for claims submitted, even if you have not yet contributed the amount equal to your annual election. FLEXONE will reimburse you via mail or direct deposit. After you have incurred claims equal to your annual election, FLEXONE will no longer pay claims.
8. You have 90 days after the plan year ends to file claims that were incurred during the plan year. July 29 is the final date.
9. If you do not incur and claim expenses that equal your full elected amount, the balance in your account is forfeited. Similarly, if you are reimbursed for eligible expenses and leave the city before contributing the full elected amount, the city cannot seek reimbursement from you.
10. At the end of the calendar year, your W-2 will reflect a lower taxable income. That’s when you really feel SMART!

Who is eligible for this benefit?

Any employee who is eligible for city benefits is eligible to participate in the HFSA. You do not have to be enrolled in the city’s medical or dental plans.

Why is HFSA a SMART choice for most employees?

In the example below, you earn $35,000 per year and you decide to put $500 into the HFSA to pay for medical and prescription copayments that you know you will incur in the next 12 months. You can save $177 by lowering your taxable income and paying less tax.

Without the HFSA, you pay taxes on every dollar you earn, and then you pay for medical expenses. With the HFSA, you can set aside a portion of each paycheck for medical expenses. This amount is deducted from your paycheck before taxes are calculated, so the taxes you owe should decrease. In other words, you won’t pay taxes on the money you spend on qualified out-of-pocket medical expenses through this plan!

How much can I put in my HFSA?

Minimum and maximum: If you decide to participate in the new HFSA, you may contribute from $120 to $1,000 per year to pay for eligible health care expenses that you expect to incur during the plan year, May 1 – April 30. During open enrollment you will estimate next year’s medical expenses and elect the amount you wish to put into the HFSA. This amount will be deducted over 24 paychecks in equal amounts. The worksheet on the back cover of this guide will help you estimate your eligible expenses.

For example, if you decide to put $240 into your HFSA, $10 will be deducted from your paycheck for 24 paychecks from May through April. A $500 annual contribution is $20.83 from each paycheck.

		SMART facts, at a glance About Your HFSA Minimum contribution = $120 a year/$5 per pay period Maximum contribution = $1,000 a year/$41.67 per pay period Plan year is May through April. Incur claims May 1 through April 30 File claims for 90 days beyond plan year, through July 29 Claim administrator is FLEXONE Minimum claim reimbursement is $10