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Health
Care Spending Account (HCSA)
Questions & Answers
An
IRC Section 125 Flexible Spending Account (FSA) program offers a tremendous
opportunity to reduce your taxes by paying for eligible unreimbursed
Health Care expenses using pre-tax dollars. When you use pre-tax dollars,
you will reduce your taxable income and have fewer taxes taken out of
your paycheck. Thus, you save federal, state (in most states), and Social
Security taxes on every dollar you deposit into your Flexible Spending
Account(s). We have highlighted the most frequently asked FSA questions
below so you can better understand the tax benefits of this program!
Note:
This FAQ discusses specific HCSA questions. You should also read the
FSA FAQ for answers to more general questions.
Can I change my elections in
the Section 125 plan at anytime during the plan year?
What happens to the funds I set aside?
How much money can I set aside on a pre-tax basis?
What are examples of eligible health care
expenses?
How often will my claims be reimbursed?
How will I know the balance in my Flexible
Spending Plan?
Can I change my elections in the Section 125 plan at anytime during
the plan year?
No.
You cannot change your elections during the plan year, except
in the event of specified status changes. For purposes of Health
Care Spending Accounts status changes are changes in relation
to:
- Legal
Marital Status. Events that change your legal marital
status, including the following: marriage, death of your spouse,
divorce, legal separation and annulment.
- Number
of Dependents. Events that change the number of your
dependents including the following: birth, death, adoption and
placement for adoption.
- Employment
Status. Events that change your employment status or
the employment status of your spouse or dependent including:
a termination or commencement of employment, a strike or lockout,
a commencement of or return from an unpaid leave of absence
and a change in work site.
- Dependent
Satisfies or Ceases to Satisfy Eligibility Requirements.
Events that cause your dependent to satisfy or cease to satisfy
eligibility requirements for coverage on account of attainment
of age, student status, or any similar circumstance.
- Residence.
A change in your place of residence or that of your spouse or
dependent. Note: No change to the Health Care Spending
Account is allowed unless the change in residence specifically
affects the eligibility of the employee to participate in the
Health Care Spending Account. The changing of Health Care Plans
alone would not allow a change to the Health Care Spending Account.
- Judgment,
Decree or Order. If a judgment, decree or order from a court
requires your dependent child to be covered under this plan,
you may change your election to provide coverage for the child.
Conversely, if the order requires another individual to provide
coverage, you may change your election to revoke coverage for
your child.
- Entitlement
to Medicare or Medicaid. If you, your spouse and/or a dependent
who is enrolled in the plan's accident or health coverage becomes
enrolled in Medicare or Medicaid, you may cancel or reduce coverage
for the person who becomes enrolled in Medicare or Medicaid.
Conversely, if you, your spouse and/or a dependent who was covered
under Medicare or Medicaid loses this coverage, you are allowed
to make a prospective election to commence or increase coverage
for the person who loses Medicare or Medicaid coverage under
the accident or health plan.
Unless
you are subject to one of these qualifying events, your election
is irrevocable for the plan year. If you experience one of the
changes noted above, you are allowed to modify your election within
30 days of the event. Your election change must be consistent
with your status event.
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What happens to the funds I set aside?
The
funds you set aside are deposited into an account for out-of-pocket
health care expenses. The money targeted for your Health Care
Spending Account is available for immediate reimbursement up to
your annual target amount.
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How much money can I set aside on a pre-tax basis?
Refer to your "Plan Highlights" for specific details
about your Plan.
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What
are examples of eligible health care expenses?
You
can pay for a wide variety of health care expenses through your
pre-tax FSA account. These expenses include, but are not limited
to, deductibles, copayments, dental and orthodontia expenses,
prescription sunglasses, contact lenses and coinsurance.
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How
often will my claims be reimbursed?
Claims
will be reimbursed on a predetermined schedule. Refer to your
"Plan Highlights" for your particular schedule.
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How will I know the balance in my Flexible Spending Plan?
View
your balance online! In addition, ProBusiness Administrative Services
will furnish quarterly statements detailing your account balances,
and you can call the toll-free telephone number, 800-269-0020, to
access this information.
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