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What Is The Flex Spending Account?
The Flex Spending Account is a negotiated benefit for State employees. There are
two parts to the Flex Spending Account -- the Dependent Care Advantage Account (DCAAccount) and the Health Care Spending Account (HCSAccount). Both are types
of Flexible Spending Accounts (FSA). FSAs give you a way to pay for your dependent care or health care expenses with pre-tax dollars. FSAs are voluntary -- you decide how much to have taken out of your paycheck and put into your DCAAccount and/or HCSAccount.
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Why Should I Enroll?
If you are paying for dependent care expenses in order to work, or have medical expenses that are not reimbursable under your health insurance, you are paying for those expenses with dollars that have already been taxed. By enrolling in the DCAAccount or HCSAccount, you will pay those same expenses with whole dollars -- before federal, state and social security taxes are taken from your salary. For 15 years, the Dependent Care Advantage Account(DCAAccount) has been consistently saving State employee participants hundreds of dollars on their dependent care expenses. The Employer Contribution returned in 2005 as a result of the recent collective bargaining agreements and participation in the DCAAccount soared. In 2006, the Employer Contribution will provide up to $700 for employees in eligible bargaining units who enroll in the DCAAccount. We expect another increase in participation as more working parents learn that the Employer Contribution could significantly help cover summer day camp, nursery school, child care center, or adult day care costs. The HCSAccount is a great way to help you save on many of your family's health care expenses as well. Since the benefit was introduced in 2001, participation has risen nearly 136 percent as State employees have used their HCSAccounts to save money on prescription drugs, orthodontia, and other medical services provided to their families.
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Fees
There are no fees for employees who participate in either the DCAAccount or the HCSAccount. The Flex Spending Account is funded by the Governor's Office of Employee Relations and the Family Benefits Program in cooperation with State public employee unions. The Legislature and Unified Court System also contribute on behalf of their employees.
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FSA Administrator
Fringe Benefits Management Company is the current FSA Administrator.
Fringe Benefits Management Company (FBMC) reviews claims, writes checks, and provides customer service and accounting services. Flex Spending Account participants send all claims for reimbursement directly to FBMC.
When you apply for one of the programs offered under the Flex Spending Account, FBMC will send you a letter confirming the amount you choose to set aside for 2006. If you find any discrepancy in the information in the confirmation letter, you must notify FBMC at 1-800-342-8017 by December 14, 2005 to make the change.
For information regarding claims submitted or your account balance, you will have access to FBMC's toll-free customer service, weekdays between 7 a.m. and 10 p.m. ET, at 1-800-342-8017.
FBMC has an Interactive Benefits System that allows you to access your account and claims information 24 hours a day, 7 days a week. The Interactive Benefits System includes a toll-free customer service line called the Information Line. When you dial 1-800-865-3262 you will receive step-by-step instructions to access information about your account.
You can now also check your account balance online by logging onto the FSA web site at www.flexspend.state.ny.us..
FBMC will provide you with your account balance and a new reimbursement request form with each reimbursement check or direct deposit stub.
FBMC will send you quarterly and year-end statements that detail the activity in your account.
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Period Of Coverage
The period of coverage for the Flex Spending Account is the calendar year.
For the 2006 Plan Year, the period of coverage is January 1, 2006 through December 31, 2006.
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2006 Open Enrollment Period
The 2006 FSA open enrollment period begins September 26, 2005 and continues through November 10, 2005.
Apply Online
You can apply for enrollment in either the HCSAccount or the DCAAccount or both through the Internet. The application process is paperless, quick, and easy. On the enrollment application, you will be asked for basic information - your name, address, phone number, social security number, and the amount you want to set aside in your account for the Plan Year. It's that simple! At the end of the open enrollment period, you will receive confirmation of your enrollment from FBMC.
Apply Over The Telephone
If you choose not to enroll online, simply call 1-800-358-7202 and a Customer Service Representative (CSR) will take your application over the phone. The CSR will ask you for the same basic information described above and will promptly send you notification of your enrollment application through the mail.
If you apply over the telephone, you must sign and return the notification form to FBMC to complete your application. If you do not sign and return this notification form, you will not be enrolled for 2006. Enrolling online eliminates the step of returning a signed Notification Form.
After your application has been processed and your eligibility confirmed, you will receive a letter from FBMC by early December confirming your 2006 enrollment. Your FSA enrollment lasts for only one year. Re-enrollment is not automatic. During the open enrollment period each year, you will have an opportunity to sign up for the next Plan Year.
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How Does The Flex Spending Account Work?
The Flex Spending Account is easy to understand and to use. You may choose to enroll in either the DCAAccount or the HCSAccount, or both. This is how it works:
During the open enrollment period, use the HCSAccount worksheet or the DCAAccount worksheet to estimate what your out-of-pocket health care and dependent care expenses will be for the 2006 calendar year. Based on your estimate, decide how much of your salary you want to set aside in either or both accounts. Submit your enrollment application online or through the toll-free number before the open enrollment period ends.
Each pay period, a regular portion of this amount will be deducted from your biweekly paycheck. These deductions are made before your federal, state, and social security (and New York City, if applicable) taxes are calculated. The contributions to your Flex Spending Account are deducted tax-free from your gross pay.
After you have incurred eligible expenses, mail a reimbursement request form and your bill or receipt to the FSA Administrator. You will receive a check within five to seven days by mail. Or, you can use the direct deposit option (Enter to RACE) to have the funds go directly into your savings or checking account within 48 hours.
Faxing Reimbursement Request Forms
Participants in the Flex Spending Account may fax reimbursement request forms toll-free to the FSA Administrator. By faxing your forms and using the direct deposit option, you can speed your reimbursements by eliminating mail time completely.
Enter the RACE
- If you decide to Enter the RACE (PDF) (Rapid Access Check Express), you will have quicker access to your reimbursements by eliminating mail time.
- Participants in the Flex Spending Account can have their authorized reimbursements deposited directly into their own banking institution. This feature of the Flex Spending Account is optional.
- In order for you to take advantage of this option, your financial institution must be a member of the New York Automated Clearing House.
- The FSA Administrator will mail you a receipt each time an electronic transfer is made to your account.
- Submit your reimbursement request forms regularly to maximize the speed of your reimbursements.
- A form to Enter the RACE (PDF) is available on this web site or by calling 1-800-358-7202.
- If you Enter the RACE and later make a change to your bank account, you must submit a new RACE form to have your reimbursements deposited to your new account.
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Forfeiture Rules -- "Use It Or Lose It"
Because of the tax advantages of the Flex Spending Account, the Internal Revenue Service (IRS) has strict guidelines for its use. One of these guidelines is commonly known as the "use it or lose it" rule. Put simply, if you contribute pre-tax dollars into your DCAAccount or HCSAccount and then do not have enough eligible expenses during the Plan Year to equal the amount you contributed, you will lose the balance remaining in your account when the Plan Year ends. That is why it is important to plan carefully before deciding how much to contribute. With careful planning, you can minimize the risk of losing any of your contributions. According to the IRS, after all submitted reimbursement claims have been processed, any funds remaining must be returned to the employer. The unused funds are used to defray the cost of administering the program. Participants have until March 31, 2007 to submit any eligible unreimbursed expenses from the 2006 Plan Year. But remember -- if you plan properly, you are unlikely to forfeit any of your funds.
A new ruling from the US Treasury Department may offer some relief to the “use it or lose it” rule. If the State makes changes to the current NYS Flex Spending Account rules, program participants will be notified.
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When Will Deductions Begin?
If you receive 26 paychecks annually, payroll deductions for your DCAAccount or HCSAccount will be taken from 24 pay periods in Plan Year 2006. Participants on the Administrative pay cycle will have their first deduction on January 11, 2006; participants on the Institutional pay cycle will have their first deduction on January 19, 2006.
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Effect On Other Benefits
Social Security Tax (FICA)
Contributions to the HCSAccount and DCAAccount may reduce your social security taxes. If so, based on current social security law, social security benefits at your retirement age may be slightly less as a result of your participation in the HCSAccount and DCAAccount. The effect will be minimal and would likely be offset by the amounts saved in taxes today. If you are concerned about this, contact the Social Security Administration at 1-800-772-1213.
New York State Pension
Contributions to the HCSAccount and DCAAccount have no effect on your New York State pension contributions or benefits.
Deferred Compensation
If you contribute to the New York State Deferred Compensation Plan, participation in the FSA program may affect you. The percentage you contribute to the deferred compensation plan will be applied to a lower salary amount, resulting from your FSA contributions. Since such contributions are made as a percentage of salary, your deferred compensation contribution may be lower, depending on the amount of your annual salary and the amount you currently contribute to your deferred compensation plan. Most employees' contributions will be unaffected by participation in the FSA program.
SUNY Deferred Annuity Plan
Contributions to the State University of New York's tax-deferred annuity plan are not affected by participation in the FSA program.
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