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What Is The Flex Spending Account?
The Flex Spending Account (FSA) 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 that give you a way to pay for your dependent care or health care expenses with pre-tax dollars. Enrollment in the FSA is 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 16 years, the DCAAccount has been consistently saving State employee participants hundreds of dollars on their dependent care expenses. More and more working parents learn that the DCAAccount can significantly help with the cost of 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 tripled in size as more than 13,600 State employees used their HCSAccounts in 2007 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 program. 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 (FBMC) is the 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 2008. If you find any discrepancy in the information in the confirmation letter, you must notify FBMC by December 12, 2007 to make the change. For information regarding your confirmation letter, claims submitted or your account balance, you will have access to FBMC's toll-free customer service, Monday - Friday, between 7 a.m. and 10 p.m. EST, at 1-800-342-8017.
FBMC will provide you with your account balance and a new reimbursement request form with each reimbursement check or direct deposit stub. You will also receive quarterly and year-end statements that detail the activity in your account.
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2008 Open Enrollment Period
The 2008 FSA open enrollment period begins September 24, 2007 and continues through November 16, 2007. The plan year for the FSA is the calendar year. The 2008 plan year runs from January 1, 2008 through December 31, 2008.
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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 2008 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 tax-free 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 FBMC. You will receive a check within five to seven days by mail. Or, you can use the direct deposit option (see 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 at 1-800-743-3271. By faxing your forms and using the direct deposit option, you can speed your reimbursements by eliminating mail time completely. Reimbursement request forms cannot be submitted via e-mail because of the required documentation that must be attached.
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.
- FBMC 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 remaining balance 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, 2009 to submit any eligible unreimbursed expenses from the 2008 plan year. But remember -- if you plan properly, you are unlikely to forfeit any of your funds.
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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
Most employees’ contributions to the New York State Deferred Compensation Plan will be unaffected by participation in the FSA program. In some cases, however, 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, as a result of 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.
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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Changing Your Coverage
Am I permitted to make election changes after the plan year begins?
Under some circumstances, you may be able to make a change to your FSA election, depending on the qualifying event and requested change.
How do I make a change?
If you have a change in status event that occurs after the open enrollment period ends, you may be able to enroll during the plan year.
Please refer to the respective HCSAccount and DCAAccount pages for specific information on changes in status.
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Appeal Process
If your change in status, reimbursement request, or other request is denied, in full or in part, you have the right to appeal the decision by sending a written request within 30 days of the denial for review to FBMC.
Your appeal must include:
- the name of your employer – State of New York
- the date of the services for which your request was denied
- a copy of the denied request
- the denial letter you received
- why you think your request should not have been denied
- any additional documents, information, or comments you think may be relevant to your appeal
Your appeal will be reviewed once it and its supporting documentation are received. You will be notified of the results of this review within 30 business days from receipt of your appeal. In unusual cases, such as when appeals require additional documentation, the review may take longer than 30 business days. If your appeal is approved, your account will be adjusted as soon as possible. Appeal decisions are based upon whether your extenuating circumstances and supporting documentation are consistent with the FSA rules and IRS regulations governing the plan.
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