New York State's Flexible Spending Accounts - Health Care Spending Account

Flex Spending Account, A State employee benefit that puts money in your pocket

Health Care Spending Account

What Is The Health Care Spending Account?
Who Is Eligible To Enroll?
How Do I Enroll?
Eligible Expenses
Ineligible Expenses
Over-The-Counter Drugs
Changes In Status
HCSAccount Claims Process
Payroll Changes
Saving With The HCSAccount
Health Care Spending Account Worksheet
Health Care Spending Account Forms

Message From The Director

Overview

Health Care Spending Account

Dependent Care Advantage Account

Frequently Asked Questions

NYS Flex Spending Account Home

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 2006 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 non-judicial employees of the Unified Court System are eligible if they:

are permanent employees or are expected to be on the payroll for the entire 2006 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 2006 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, PBA, and NYSPIA. In addition, all bargaining units in the Unified Court System are eligible to participate.

Employees of the Roswell Park Cancer Institute, NYS Energy Research and Development Authority, and Environmental Facilities Corporation are also allowed to participate if they meet the eligibility criteria listed above.

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, fee basis, and hourly employees, as well as retirees, 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 2006 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 ($11,849 or more between July 2, 2005 and July 1, 2006).

Casual, seasonal, session, per diem, fee basis, and hourly employees, as well as retirees, are not eligible to participate.

3. New employees who meet the eligibility criteria and wish to participate may do so by submitting a change in status application (PDF), which must be received 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. This 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 2006 Plan Year, the enrollment period begins September 26, 2005 and concludes November 10, 2005.

Use the Health Care Spending Account Worksheet to help you estimate your out-of-pocket health care expenses for the 2006 Plan Year. Include only those health care expenses that will occur after the Plan Year begins. You may include expenses for you, your spouse, your qualifying children, and your qualifying relatives. 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. If you expect to be on the New York State payroll for the entire year, deductions will be taken from a maximum of 24 paychecks.
You can enroll in the HCSAccount online. Select "Apply Now" from the menu and follow the simple instructions on the page. Indicate the amount of your annual election for the 2006 Plan Year, as well as the number of paychecks you expect to receive for the year. Once you complete the online enrollment application, click the "Submit My Application" button and you are done. The process is quick, easy, and secure. Be sure to print a copy of your application for your records.

If you do not have Internet access, you can also enroll by simply calling the FSA Administrator at 1-800-358-7202. A Customer Service Representative (CSR) will ask you all the information needed for your enrollment application. Once you apply, a notification of your enrollment information for the 2006 Plan Year will be sent to you. Sign and return the notification form in order to complete your application. If you do not sign and return this notification form by the specified deadline, you will not be enrolled for 2006.
If you do not enroll in the HCSAccount when you are first eligible, you must wait until the next open enrollment period, 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, Rather, they must submit a Change in Status application to enroll when 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 or any other benefit plan, nor will you seek reimbursement from such plans.

Whose expenses are eligible for reimbursement?
You may claim eligible expenses under the HCSAccount program for the following individuals:

yourself

your spouse

your qualifying child or

your qualifying relative.

An individual is a qualifying child if they:

are a U.S. citizen, national, or a resident of the U.S., Mexico, or Canada, and;

have a specified family-type relationship to you, and;

live in your household for more than half of the taxable year, and;

are 18 years old or younger (23 years, if a full time student) at the end of the taxable year, and;

have not provided more than one-half of their own support during the taxable year (and receive more than one-half of their support from you during the taxable year if a full time student age 19 through 23 at the end of the taxable year).

An individual is a qualifying relative if they:

are a U.S. citizen, national, or a resident of the U.S., Mexico, or Canada, and;

have a specified family-type relationship to you, are not someone else’s qualifying child and receive more than one-half of their support from you during the taxable year, or;

if no specified family-type relationship to you exists, are a member of and live in your household (without violating local law) for the entire taxable year and receive more than one-half of their support from you during the taxable year.

Note: There is no age requirement for a qualifying child if he/she is physically and/or mentally incapable of self-care. An eligible child of divorced parents is treated as a dependent of both, so either or both parents may establish a HCSAccount to be reimbursed for the child’s health care expenses.

According to the IRS, a domestic partner's health care expenses are eligible for reimbursement through a HCSAccount only if the domestic partner is a qualifying relative under the Internal Revenue Code.

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), although Publication 502 should not be solely relied upon to determine your eligible expenses under the HCSAccount. For example, expenses such as insurance premiums are deductible on Schedule A, but are not eligible for reimbursement through the HCSAccount. In addition, the IRS allows you to deduct an expense if it is paid during the tax year, while HCSAccount claims are reimbursed only if an expense is incurred during the Plan Year. Also, 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
Alcoholism treatment
Ambulance services
Artificial limbs ³
Chiropractic care
Christian Science practitioners
Contact lenses
(corrective)
Contact lens
solutions
Copayments
Crutches
Deductibles
Dental fees ¹
Dentures
Diagnostic tests

Drug addiction treatment
Drugs
(prescription only) ²
Eye examinations
Eyeglasses ³
Guide dog expenses
Hearing aids & exams
Holistic healers
Infertility treatments
Insulin
Laboratory fees
Laser eye surgery ⁴
Naturopathic healers
Orthopedic shoes
Orthodontic treatment
Oxygen
Nursing services ¹

Psychiatric care
Periodontal fees
Physical therapy
Smoking cessation
programs/ treatments
Surgery ^1,4
Telephone for the
hearing-impaired
Transplants of organs
Transportation ⁵
Vaccinations
Weight loss programs ⁶
Wheelchairs

¹ Some health care treatments or services, including those 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 Not all drugs requiring a prescription are approved by the IRS as eligible for reimbursement. Prescription drugs that are used solely for cosmetic purposes are not eligible for reimbursement.
³ The effective date that expenses are incurred (for example, 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 health care provider (prior to enrolling for 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 mileage expenses (18 cents per mile in 2006, 15 cents per mile from 1/1/05 to 8/31/05, and 22 cents per mile from 9/1/05 to 12/31/05) 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 a physician prescribes the treatment as medically necessary to prevent, treat, or alleviate a specific, diagnosed medical illness (such as hypertension, diabetes, or obesity).

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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 procedures
Cosmetic surgery
Dance lessons
Electrolysis
Exercise equipment¹
Fitness programs¹
Glucosamine/condroitin
Hair transplants

Health club memberships
Herbal remedies
Holistic medicines
Insurance premiums
Marriage counseling
Massage therapy¹
Over-the-counter drugs²
Over-the-counter supplies²

Smoking cessation
drugs
(over-the-counter)²
Teeth whitening/bonding
Vision service contracts
Vision warranties
Vitamins^1,2

¹ May be an eligible expense if prescribed by a doctor to treat a specific medical condition. Written proof of medical necessity is required.
² Beginning January 1, 2004, over-the-counter drugs and expenses are reimbursable for certain employees.

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Over-The-Counter Drugs
Over-the-counter (OTC) drug expenses are now reimbursable through the HCSAccount for certain employees. Reimbursable expenses include allergy remedies, antacids, cold medicines, and pain remedies. For the 2006 Plan Year, the following employee groups are eligible for OTC drug reimbursement: CSEA, PEF, UUP, M/C, PBA, NYSPIA, DC-37, all bargaining units in the Unified Court System, and employees of the Legislature. Pending the outcome of negotiations, OTC drug coverage may be extended to additional State employee groups at a later date. Check this web site or call 1-800-358-7202 to find out if you are a member of an employee group that is eligible for OTC drug reimbursement.

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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 increase the amount of your contribution, and if you lose a dependent during the Plan Year, you may reduce the amount of your contribution. However, you are not allowed to reduce your election amount to $0 if you have a change in status. Below is a list of eligible changes in status (CIS):

change in legal marital status such as marriage, death of spouse, divorce, legal separation, or annulment
change in number of eligible 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 eligible dependent's eligibility for health insurance coverage due to a change in employment
gain or loss of your dependent's eligibility for health insurance by attaining a specified age, due to a change in student or marital status, or because of any other circumstance

If you have a CIS, call Customer Service for a change in status application. Your change in status application (PDF) must be received within 60 calendar days of the qualifying event, but as promptly as possible to prevent unwanted, non-refundable deductions. 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.

The effective date of your new period of coverage will generally be the date your application is received by the FSA Administrator, unless you are a new employee. In addition, if you are enrolled in the HCSAccount when the Plan Year begins on January 1 and you submit a change in status request during the Plan Year, you will have two distinct periods of coverage from which expenses must be incurred and will be reimbursed.

Change in status applications (PDF) will be accepted during the Plan Year until November 15. Applications received after that date can't be processed in time for the last payroll deduction of the year.

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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 (PDF) 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 due, even if no office visit takes place during that month.
Use the reimbursement request form (PDF) provided by the FSA Administrator 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 the service was provided;
- name and address of the health care provider;
- amount charged for each service;
- type of service and the date performed; and
- if a prescription drug expense, a receipt containing the prescription number and drug name.
Submit claims to the FSA Administrator 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 the FSA Administrator.

Remember, when the Plan Year ends on December 31, you still have 90 days to send in a reimbursement request form (PDF) for expenses you incurred 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 and remain on the State payroll for the entire year, 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 will begin 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 coverage will begin when your change in status (PDF) application is received, although it cannot precede the date of your qualifying event.
If you enroll during the open enrollment period and experience a mid-year change in status, you will have two separate periods of coverage from which expenses will be reimbursed.

When will I be reimbursed?
The FSA Administrator 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, leave without pay (including leave under the Family and Medical Leave Act), or any other reason, 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, under certain circumstances you may still continue participating in the HCSAccount after you leave the payroll:

If you are eligible to elect COBRA coverage, you can make after-tax payments directly to the FSA Administrator, although under the direct pay option, you won't save money on your taxes. If you leave the payroll during the Plan Year (either temporarily or permanently) and want to continue your coverage, the FSA Administrator will send you a COBRA notice that you must sign and return by the specified deadline.
If you retire, terminate employment, or take a planned leave of absence (such as under the Family and Medical Leave Act) you can pre-pay your election by increasing the amount of your biweekly deductions to compensate for the deductions you expect to miss once you leave the payroll. If you choose this option, you must contact program administrators via email (fsa@goer.state.ny.us) as soon as possible to arrange for your deductions to be adjusted before you receive your last paycheck.
If you return to the payroll during the same Plan Year, you can re-enroll if you submit a change in status (PDF) application within 60 days of your return to work. CIS applications will be accepted during the Plan Year until November 15.
If you leave and then return to the payroll, you may re-enroll, but only for the same election amount that you had at the time you left the payroll. However, as with any mid-year change in status, you will then have two distinct periods of coverage from which expenses must be incurred and will be reimbursed.

Remember, even if you re-enroll in the HCSAccount after you return to the payroll, you will not be reimbursed for health care expenses incurred while you stopped contributing to your account.

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Saving With The HCSAccount
The following is an example of the HCSAccount tax advantage based on the 2004 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. We also encourage you to use the HCSAccount online calculator to help estimate your potential savings based on your specific situation, but keep in mind the amount of your tax savings cannot be guaranteed. Be sure to consult a tax advisor if you require tax advice for your financial situation.

Tax Savings Example

A single employee earns $53,000, declares 2 dependents, and files as head of household. The annual HCSAccount contribution is $1,300 and the employee incurs $1,300 in reimbursable health care expenses.
	With HCSAccount	Without HCSAccount	Savings With HCSAccount
Annual Income	$53,000	$53,000
Expenses Paid through HCSAccount	-1,300	-0-
Adjusted Gross Income	$51,700	$53,000
Federal Income Tax	-4,781	-4,976	$195
State Income Tax	-2,124	-2,213	89
Social Security Tax	-3,955	-4,055	100
After-Tax Cost of Health Care Expenses	-0-	-1,300	_______
Your Spendable Income (assuming there are no other payroll deductions)	$40,840	$40,456	$384
This employee could save $384 in taxes by using the HCSAccount!

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This Page Last Updated: Thursday, December 15, 2005 at 1:11:51 PM