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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 a type of Flexible Spending Account (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. Since 1991, the DCAAccount has consistently saved State employee participants an average of $1,500 annually on their dependent care expenses. The Employer Contribution, a feature implemented as a result of collective bargaining, is being increased up to $600 for eligible State employees who enroll in the DCAAccount in 2002. Last year, participation in the DCAAccount surged, as working parents learned that the Employer Contribution could significantly help cover summer day camp, nursery school, child care center, or adult day care costs. Now the HCSAccount can help you save on certain health care expenses as well.
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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 Committee 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 FSA Administrator for the 2002 Plan Year.
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 enroll in 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 2002. If you find any discrepancy in the amount requested or in other information in the confirmation letter, you should notify FBMC immediately at 1-800-342-8017.
For information regarding claims submitted or your account balance, you will have access to FBMC's 15 hour toll-free customer service, weekdays between 7 am and 10 pm EST, at 1-800-342-8017.
In addition, FBMC has an Interactive Benefits System that will allow 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.
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 2002 Plan Year, the period of coverage is January 1, 2002 through December 31, 2002.
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2002 Open Enrollment Period Deadline November 9, 2001
The open enrollment period for the Flex Spending Account begins September 17, 2001 and continues through November 9, 2001. Enrollment forms for the DCAAccount and the HCSAccount are included on this website. On the enrollment form, you will specify how much you want to have set aside in your account for the entire year. Your enrollment lasts for only one year at a time. Re-enrollment is not automatic. During the open enrollment period each year, you will have an opportunity to sign up for the next calendar year.
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How Does It 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:
For the HCSAccount:
During the open enrollment period, use the HCSAccount worksheet on this website to estimate what your out-of-pocket health care expenses will be for the 2002 calendar year. Based on your estimate, decide how much of your salary, up to $3,000, you want to set aside in your HCSAccount. Fill out the enrollment form for the HCSAccount and turn it in to your Health Benefits Administrator, located in your personnel office, 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 HCSAccount are deducted tax-free from your gross pay.
When you have a health care expense that is not covered by your health insurance, mail a reimbursement request form and your bill or receipt to FBMC. You will receive a check within 5 to 7 days by mail. Or, you can use the direct deposit option to have the funds go directly into your savings or checking account within 48 hours.
For the DCAAccount:
If you have dependent care expenses, use the DCAAccount worksheet on this website to decide how much of your salary you want to set aside in your DCAAccount. Fill out the enrollment form for the DCAAccount and mail it directly to the address on the form, or enroll online, before the open enrollment period ends. If you are eligible for an Employer Contribution, read the enrollment form instructions carefully. As with the HCSAccount, a regular portion of this amount will be deducted from your biweekly paycheck. The money you set aside in your DCAAccount is also deducted tax-free from your gross pay.
When you have a dependent care expense, simply fill out a reimbursement request form and mail it to FBMC with the invoice or receipt. Or, if you have your care provider countersign the reimbursement request form, you do not need to attach an invoice or receipt.
Telefaxing
Participants in the Flex Spending Account may fax their reimbursement request forms toll-free to FBMC at 1-800-743-3271. By faxing their forms and using the direct deposit option, participants can speed their reimbursements by eliminating mail time completely.
Enter the RACE
- If you decide to Enter the RACE (Rapid Access Check Express), you will have quicker access to your reimbursement 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 confirmation notice each time an electronic transfer is made to your account.
- Continue submitting your reimbursement request forms regularly to maximize the speed of your reimbursements.
- A form to Enter the RACE (PDF) is included on this website. If you would like more information on this option, call 1-800-358-7202.
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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 will be used to defray the cost of administering the program. Participants have until March 31st of the following year to submit any eligible 2002 Plan Year unreimbursed expenses. 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
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. 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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