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Health Care Spending Account
What Is The Health Care Spending Account?
Who Is Eligible To Enroll?
How Do I Enroll?
Eligible Expenses
Ineligible Expenses
Changes In Status
HCSAccount Claims Process
Payroll Changes
Saving With The HCSAccount
Health Care Spending Account Worksheet
Health Care Spending Account Forms |
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What Is The Health Care Spending Account?
The Health Care Spending Account (HCSAccount) is a negotiated employee benefit that helps State employees pay for health-related expenses with tax-free dollars. This includes medical, hospital, laboratory, prescription drug, dental, vision, and hearing expenses that are not reimbursed by your insurance or other benefit plans.
Before participating in the HCSAccount program, you should carefully consider what your eligible expenses might be. Reviewing your expenses from previous years can help. Once you have estimated the amount of your expenses, you may then determine how much to contribute to your HCSAccount. Under federal law, any money that you put into your HCSAccount must be used for expenses incurred during the Plan Year in which it was contributed. For the 2002 Plan Year, the maximum annual contribution allowed by the program is $3,000 and the minimum annual contribution is $150.
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Who Is Eligible To Enroll?
1. Employees who work for New York State Executive Branch State agencies (excluding UUP-represented employees), employees of the Legislature and nonjudicial employees of the Unified Court System are eligible if they:
- are permanent employees or are expected to be on the payroll for the entire 2002 calendar year (employees who teach on a school-year schedule and are paid on a 10-month basis are eligible if they meet the other criteria below); and
- are employed on an annual-salaried basis; and
- receive regular, bi-weekly paychecks; and
- work half-time or more on a regular schedule; and
- are eligible to enroll in the New York State Health Insurance Program; and
- are represented by a bargaining unit that is eligible to participate, or are designated Management/Confidential. For the 2002 Plan Year, employees of Executive Branch State agencies who are represented by one of the following unions are eligible to participate in the HCSAccount: CSEA, PEF, NYSCOPBA, Council 82, District Council 37 and NYSPIA. In addition, all bargaining units in the Unified Court System are eligible to participate.
All judges and justices of the Unified Court System, and paid elected officials and paid members of the legislative body are eligible regardless of their work schedule.
Casual, seasonal, session, per diem, and hourly employees are not eligible to participate.
2. UUP-represented employees employed by the State University of New York are eligible if they:
- are permanent employees or are expected to be employed by New York State for the entire 2002 calendar year (employees who are hired on a semester basis are eligible if they meet the other criteria below); and
- receive regular, bi-weekly paychecks; and
- are eligible to enroll in the New York State Health Insurance Program; and
- are academic employees who teach two or more courses per semester; or
- are full-time professional employees; or
- are part-time academic or professional employees who are hired at a specified annual rate ($10,502 or more between July 2, 2000 and July 1, 2001, and $10,817 or more between July 2, 2001 and July 1, 2002).
Casual, seasonal, per diem, and hourly employees are not eligible to participate.
3. New employees who meet the eligibility criteria and wish to participate must submit an enrollment form to their Health Benefits Administrator within 60 days of their employment start date. You will be able to submit claims for health care services that are received after the completion of 60 consecutive calendar days of State service. That means that claims will only be processed if the service date is on or after the 61st day of employment. Deductions will start with the first payroll date that occurs after you become eligible to submit claims.
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How Do I Enroll?
You have an opportunity to enroll in the HCSAccount each Fall during the open enrollment period. For the 2002 Plan Year, the enrollment period begins September 17, 2001 and concludes November 9, 2001.
- Use the Health Care Spending Account Worksheet included on the website to help you estimate what your out-of-pocket health care expenses will be for the 2002 calendar year. You may include expenses for anyone who will be included on your federal tax return (spouse, children, etc.). You should also verify with your health care provider that you are a suitable candidate for any surgical procedure, such as laser eye surgery, before committing the money to your account.
- Based on your estimate, decide how much of your salary ($150 to $3,000) you want to set aside in your HCSAccount. The amount you choose is taken out of your paycheck through automatic payroll deductions. The number of payroll deductions will be determined based on the number of paychecks you expect to receive during the Plan Year. No deductions will be taken out of the first and last paychecks of the calendar year.
- Complete the HCSAccount enrollment form on this website. Completed and signed forms must be returned to your Health Benefits Administrator, who is located in your agency personnel office or facility business office, by November 9, 2001 for participation in the HCSAccount in 2002. If you are not located in the same city as your Health Benefits Administrator, mail your enrollment form to him or her by November 9th. Do not mail or fax your form directly to FBMC, the Governor's Office of Employee Relations, or the Family Benefits Program. If you do, the form will be returned to you. If you do not enroll in the HCSAccount when you are first eligible, you must wait until the next open enrollment period before you can enroll, unless you experience an event that would permit a mid-year election change. Please note that State University of New York employees who are otherwise eligible for this program but only work during the Fall semester may not enroll during the open enrollment period, but rather must wait until they return to work for the Fall semester.
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Eligible Expenses
To be reimbursed through the HCSAccount, expenses must be for health care received primarily for the prevention or treatment of a physical or mental defect or illness. Out-of-pocket expenses are generally eligible if they are not reimbursed by insurance. Regardless of whether the expenses are incurred by you or your eligible dependents, they must be incurred during the Plan Year or during your period of coverage if you enroll after the Plan Year begins. An expense is incurred when you or one of your dependents receives the health care service, not when you are billed, charged for, or pay for the service. To be eligible for reimbursement, a health care expense must be:
- for you or an eligible dependent;
- permitted under the Internal Revenue Code;
- medically necessary; and
- not reimbursed by your health insurance.
Whose expenses are eligible for reimbursement?
You may claim eligible expenses under the HCSAccount program for the following individuals:
- yourself
- your spouse and
- your eligible tax dependents. To qualify as a dependent, an individual must meet the following criteria:
- The individual must be your relative or live with you for at least one calendar year, and;
- He or she must be a U.S. citizen or a resident of the U.S., Mexico or Canada, and;
- You must provide the individual with at least half of his or her total support and/or expenses during the calendar year.
An eligible child of divorced parents is considered a dependent of both parents. Therefore, either or both parents may establish a Health Care Spending Account.
Note: According to the IRS, a domestic partner's health care expenses are eligible for reimbursement through a Health Care Spending Account only if the domestic partner qualifies as a dependent under Internal Revenue Code Section 152 and if the relationship between the employee and the domestic partner does not violate state or local law.
What types of expenses are eligible?
An extensive list of medical expenses that can be deducted on Schedule A of Form 1040 appears in IRS Publication 502 (Medical and Dental Expenses), available at your Internal Revenue Service office or through the IRS website. Keep in mind that expenses such as insurance premiums are deductible on Schedule A but are not eligible for reimbursement through a Health Care Spending Account. In addition, expenses that are reimbursed through your HCSAccount may not also be deducted on Schedule A.
Examples of eligible expenses under the Health Care Spending Account are listed below:
Eligible
| Acupuncture 1 |
Drugs (prescription only) 2 |
Nursing services 1 |
| Alcoholism treatment |
Eye examinations |
Psychiatric care |
| Ambulance services |
Eyeglasses 3 |
Periodontal fees |
| Artificial limbs 3 |
Guide dogs |
Physical therapy |
| Chiropractic care |
Hearing aids & exams |
Prescription drugs to alleviate nicotine withdrawal symptoms |
| Christian Science practitioners |
Holistic & naturopathic healers |
Smoking cessation programs/ treatments |
| Contact lenses (corrective) & contact lens solutions |
Infertility treatments |
Surgery 1,4 |
| Copayments & deductibles |
Insulin |
Telephone for the hearing-impaired |
| Crutches |
Laboratory fees |
Transplants of organs |
| Dental fees 1 |
Laser eye surgery 4 |
Transportation 5 |
| Dentures |
Orthopedic shoes |
Vaccinations |
| Diagnostic tests |
Orthodontic treatment 1 |
Weight loss programs 6 |
| Drug addiction treatment |
Oxygen |
Wheelchairs |
1 Some health care treatments or services deemed cosmetic in nature require written proof of medical necessity from your health care provider with your initial reimbursement request and for each subsequent Plan Year that you participate.
2 Prescription drugs that are used solely for cosmetic purposes are not eligible for reimbursement.
3 The effective date that expenses are incurred for eyeglasses and prosthetic devices is the day the item is available to be picked up, not the date ordered.
4 Unused funds designated for the HCSAccount cannot be refunded to you. Please verify with your healthcare provider (prior to the commencement of the upcoming Plan Year) that you are a suitable candidate for any surgical procedure before committing the money to your HCSAccount.
5 Must be primarily for, and essential to, medical care. Reimbursable expenses include 12 cents per mile for automobile use, parking fees, tolls, subways, buses, trains and air travel.
6 Expenses incurred for weight loss programs and special foods may only be reimbursable if the treatment is prescribed by a physician as medically necessary to prevent, treat, or alleviate a specific, diagnosed medical illness (such as hypertension or diabetes).
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Ineligible Expenses
Certain health care expenses are not eligible for reimbursement from your HCSAccount, some of which are listed below:
Ineligible
| Cosmetic surgery & cosmetic procedures |
Health club memberships |
Insurance premiums |
| Over-the-counter supplies such as Band-aids |
Dance lessons & fitness programs |
Insurance premiums |
Smoking cessation drugs (over-the-counter) |
Electrolysis |
Marriage & family counseling |
Teeth whitening/bonding |
Exercise equipment1 |
Massage therapy1 |
Vision warranties & service contracts |
Hair transplants |
Over-the-counter drugs, holistic medicines & herbal remedies |
1 Unless prescribed by a doctor to treat a specific medical condition
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Changes In Status
Once enrolled in the HCSAccount, you may not change your mind. Your pre-tax deductions will continue throughout the Plan Year. However, there are certain circumstances where a change in your annual election may be permitted, as long as the change is consistent with the change in your family situation. For example, if you become married during the Plan Year, you may only increase the amount of your contribution, and if you lose a dependent during the Plan Year, you may only reduce the amount of your contribution. Below is a list of eligible changes in status:
- Change in legal marital status such as marriage, death of spouse, divorce, legal separation, or annulment
- Change in number of tax dependents due to birth, death, adoption, or placement for adoption
- The taking of and/or return from an unpaid leave of absence for the employee
- Beginning or end of employment for the employee
- Gain or loss of spouse's or dependent's eligibility for insurance coverage due to a change in employment
- Gain or loss of your dependent's eligibility status by attaining a specified age, or due to a change in student or marital status
If you have a change in status, use the Health Care Spending Account enrollment form on this website. You must submit the enrollment form to FBMC within 60 calendar days of the qualifying event, but as promptly as possible to prevent unwanted deductions, which are not refundable. You will also need to include documentation to support the change request, such as a copy of a marriage license, divorce decree, birth certificate, adoption decree, or death certificate.
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HCSAccount Claims Process
How do I file a claim for health care expenses?
To request reimbursement for health care expenses under the HCSAccount, you must complete the HCSAccount reimbursement request form and provide proper documentation. Filing a claim is easy. Here's how:
- Receive health care services. A health care service expense is incurred when the services are provided that create the expense. You must receive health care services before you file a claim for reimbursement. However, if you are on a monthly payment plan for orthodontia services, you may submit a request for reimbursement after each monthly payment is made, regardless of when office visits take place.
- Use the Health Care Spending Account reimbursement request form (PDF) provided by FBMC or available on this website and list each separate eligible expense individually on the claim form.
- Attach a statement from your health insurance plan showing the amount of the medical expense that has not been reimbursed or attach copies of receipts, billing statements, invoices, or other appropriate supporting documentation from the health care provider. Cancelled checks or credit card receipts will not be accepted. The receipts, billing statements, or invoices must include the:
- name of the person for whom service was provided;
- name and address of the health care provider;
- amount charged for each service; and
- type of service and the date performed.
- Submit claims to FBMC after you have received health care services and know the amount of the bill for which you are responsible. All completed reimbursement request forms and supporting documentation must be mailed or faxed directly to FBMC
Remember, when the Plan Year ends on December 31, you still have 90 days to send in a reimbursement request form for expenses you had during the Plan Year. So, you have until March 31 to submit claims for services rendered from January 1 through December 31 of the preceding year.
Note: You can only be reimbursed for expenses that are incurred during your period of coverage. If you enroll during the open enrollment period, your period of coverage is from January 1 to December 31. If you enroll during the Plan Year as a new employee, your period of coverage begins after the completion of 60 consecutive calendar days of State service. If you enroll during the Plan Year as a result of a change in status, your period of eligibility starts when your enrollment form is received by FBMC.
When will I be reimbursed?
FBMC will review your reimbursement request form and supporting documentation and, if they are complete, will authorize payment. You will receive a reimbursement check once your claim is approved. Or, you can Enter the RACE (PDF) for direct deposit of your reimbursements into your checking or savings account.
No reimbursement can be made prior to the service actually being provided. However, once you sign up for the HCSAccount and decide how much you want to contribute, that total amount is available to you at any time during your period of coverage. It's like a cash advance because you don't have to wait for the cash to accumulate in your account before you can use it to pay for your unreimbursed, eligible health care expenses. Your money is tax free and interest free!
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Payroll Changes
What happens if I leave the payroll during the Plan Year?
If you leave the payroll due to termination of employment or leave without pay (including leave under the Family and Medical Leave Act) and stop contributing to your account, your eligibility in the HCSAccount will be terminated. You will still be able to submit claims for expenses that occur on or before your last paycheck deduction, but any health care expenses that occur after your contributions stop will not be reimbursed. However, you may continue participating in the HCSAccount program by making after-tax payments directly to FBMC, although under the direct pay option, you won't save money on your taxes. If you leave the payroll during the Plan Year and want to maintain your eligibility, contact FBMC to find out how to arrange for direct payments. Or, if you return to the payroll during the same Plan Year, you can re-enroll if you submit an enrollment form within 60 days.
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Saving With The HCSAccount
The following is an example of the HCSAccount tax advantage based on the 2000 federal and state income tax tables. The projections made on this sheet are only estimates of tax information and should not be assumed to be tax advice. Be sure to consult a tax advisor if you require tax advice for your financial situation.
Tax Savings Example
| A single employee earns $38,000, declares 2 dependents and files as head of household. The annual HCSAccount contribution is $1,500 and the employee incurs $1,500 in reimbursable health care expenses. |
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With HCSAccount |
Without HCSAccount |
Savings With HCSAccount |
| Annual Income |
$38,000 |
$38,000 |
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| Expenses Paid through HCSAccount |
-1,500 |
-0- |
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| Adjusted Gross Income |
$36,500 |
$38,000 |
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| Federal Income Tax |
-3,251 |
-3,476 |
$225 |
| State Income Tax |
-1,139 |
-1,228 |
89 |
| Social Security Tax |
-2,792 |
-2,907 |
115 |
| After-Tax Cost of Health Care Expenses |
-0- |
-1,500 |
_______ |
| Your Spendable Income (assuming there are no other payroll deductions) |
$29,318 |
$28,889 |
$429 |
| This employee could reduce their taxes by $429 by using the HCSAccount! |
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