Does the State guarantee the tax benefits under the Flex Spending Account?
No. The State cannot guarantee that a participant will receive the intended tax benefits. It is up to each participant to make sure that contributions are made for eligible expenses within the legal limits.

What responsibilities do I have to ensure the intended tax benefits of the program are received?
You should make sure that contributions to the Flex Spending Account will only be made: 1) for eligible expenses; 2) for qualifying individuals; 3) up to the legal or plan maximum; and 4) for services provided in the same Plan Year the contributions are made.

Wouldn’t I save more by taking a deduction on my income tax?
You need to determine whether taking tax deductions is more beneficial than using the HCSAccount and/or DCAAccount. According to the IRS, only medical and/or dental expenses that exceed 7.5% of your adjusted gross income can be deducted from your income taxes. Most people do not have expenses high enough to qualify for this deduction. For work-related dependent care expenses, the tax credit amount is determined by applying a percentage to your total dependent care expenses. In addition, money set aside through your HCSAccount and/or DCAAccount is exempt from FICA taxes. This exemption is not available on your federal income tax return.

If I reside outside of New York State, how will my participation in the Flex Spending Account be impacted?
Most states follow the federal rules; however, some states may tax the Flex Spending Account contributions. You must comply with the laws of the State where you reside.

Do contributions to my Flex Spending Account reduce my income for purposes of the Federal Earned Income Tax Credit?
No. Your Flex Spending Account contributions do not reduce income for purposes of calculating eligibility or amount of the Earned Income Tax Credit (EITC).

The EITC is available to certain households whose total family income is below the following threshold amount: 1 child, $26,928; 2 or more children, $30,580 for 1999. Consult your tax advisor or the IRS for additional information.

How would I determine if participating in the Flex Spending Account would affect my social security benefits?
Participation in the Flex Spending Account may have a minimal effect on your social security benefits upon retirement. The Social Security Administration (SSA) uses the highest 35 years of salary earned before retirement to calculate your social security benefit. However, if you are concerned, you should call the SSA for further advice (1-800-772-1213).

How much should I contribute?
How much you contribute depends on your individual situation. Consider last year’s health-related and/or dependent care expenses, any medical or dental care costs you foresee that might not be covered under your medical or dental plans, and any changes in your family status that might have an impact on your medical/dental or dependent care expenses.

What if I don’t use up all my money by the end of the year?
You will forfeit the money that remains in your account. You will have until March 31 of the following year to send in claims for expenses you incurred the previous year. Any forfeitures will be used by the State to offset the costs of administering the program. This is the “use it or lose it” feature of the plan, as required by the Internal Revenue Code. Since you do not want to lose any money, you should plan very carefully in estimating your expenses. FBMC will notify you during the last quarter of the Plan Year if you are likely to have money left in your account. If you plan properly, you are unlikely to forfeit any of your funds.

What happens if I submit a claim for an amount greater than my HCSAccount or DCAAccount balance?
When you submit a claim to the HCSAccount, you will be reimbursed up to the full amount of your annual election, regardless of the amount of money that has been deposited into your account. Contributions will continue through payroll deductions throughout the year and claims will continue to be paid until your annual contribution maximum is met.

Dependent care claims are paid a little differently. If you submit a claim and your balance is less than the amount of the claim, you will only be reimbursed for the amount of money available in your account. The remainder will be reimbursed once the money is deposited into your DCAAccount. This enables you to submit a claim only once and receive funding on an ongoing basis, rather than be denied payment or be forced to resubmit the claim until it can be paid in full. How long is my contribution in effect?
Your contribution is in effect until the end of the calendar year. Each year you will have the opportunity to re-enroll and select a new annual contribution amount.

What if I change my mind?
You may not change your mind once the Plan Year begins, but you can decide not to join next year. There are certain situations, called changes in status, and if they occur in your family during the Plan Year, you can make a change–you can either start, stop, restart, or change your deduction amounts. Examples of a change in status can be found in this Enrollment Kit.

• Do you expect to pay deductibles and copayments under your medical, dental and prescription drug insurance plans?
• Is anyone in your family planning on receiving orthodontia treatment during the next year?
• Are you or another family member planning to undergo a medical procedure that is either not covered or only partially covered under your health insurance plan?
• Is anyone in your family planning on buying a hearing aid, contact lenses or glasses and expecting to pay more than your health insurance plan will allow?

Is an employee required to participate in the New York State Health Insurance Program (NYSHIP) in order to participate in the HCSAccount?
No. If an employee has coverage elsewhere, he/she may still enroll in the HCSAccount if the eligibility criteria for the program are met.

Does the HCSAccount replace my medical plan?
No. This plan offers you a means to pay for eligible out-of-pocket health care expenses with pre-tax money. You should first submit your claims to your health care plan so that they can pay according to the plan limits. Then, the remaining out-of-pocket eligible expenses can be submitted to the HCSAccount.

Whose expenses are eligible for reimbursement under the HCSAccount program?
The HCSAccount may be used to reimburse health care expenses for you, your spouse and anyone who is claimed as a dependent on your federal tax return.

Can the HCSAccount pay my doctor directly?
No. Payment is made only to the enrollee.

How much money will I save by enrolling in the HCSAccount or DCAAccount programs?
Your savings will be based upon your individual income and tax filings.

Are my domestic partner’s health care expenses eligible for reimbursement from my HCSAccount?
According to the IRS, health care expenses for a domestic partner cannot be reimbursed through a Health Care Spending Account unless the domestic partner qualifies as a dependent under the Internal Revenue Code and also qualifies as a spouse under state and/or local law.

Can I request reimbursement from the HCSAccount program for services I receive before the Plan Year begins if I am not billed until after the Plan Year starts?
No. According to IRS guidelines, a qualified expense is “incurred” at the time the service is provided, not when you are billed (or charged) or actually pay for this service. Therefore, reimbursements made during a Plan Year are only made for eligible expenses incurred during that same Plan Year.

Can health care services that require up-front payment to the provider be reimbursed from the HCSAccount in a single Plan Year, even if the health care is delivered over several Plan Years (e.g. orthodontia)?
No. IRS regulations do not allow medical expenses to be reimbursed through a health flexible spending account until they have been incurred. Expenses are not incurred until treatment is provided to the participant, regardless of when the participant pays the provider.

Are expenses that are reimbursed by the HCSAccount eligible to be deducted on my tax return as a medical expense?
No, because you have already received reimbursement with tax-free dollars. Only expenses that are not reimbursed through an insurance plan or the HCSAccount may be claimed on your income tax return.

What happens if I retire or terminate employment with the State mid-year?
Under IRS regulations, you would be able to submit claims for reimbursement of expenses incurred prior to your termination/retirement date. Expenses incurred after you leave your employer are not eligible for reimbursement. If you meet the criteria for continued participation in the HCSAccount after termination and choose to continue your participation, expenses incurred after termination would then be eligible for reimbursement.

Can I pay my mother to care for my kids?
Yes, as long as your mother is not your dependent and will give you her social security number. You need her social security number so that you can report her as the care giver when you file claims for reimbursement and when you file your income tax return. Your mother should report the payments as income.

Can I pay my spouse?
No. You can’t pay your spouse to care for your children. You also cannot pay your own child under age 19, or any other person you claim as a dependent. You can pay your mother, father, or any other relative, but they must provide you with their social security number for reimbursement to occur.

Can I use the DCAAccount to pay a maid, cook, or housekeeper?
Yes, if the intent of the service is to provide your dependent with care while you work.

What about kindergarten? Or private elementary school?
Tuition costs from kindergarten and up are not eligible.

What if my child is cared for at my church?
In the case of a church or other religious affiliated tax-exempt day care center, you need only provide the name, address and tax exempt status of the religious institution.

Can I participate in the DCAAccount if I use an au pair to care for my children?
Yes, you may use an au pair to provide dependent care services. But only the amounts paid to cover wages, taxes on those wages, and expenses incurred by the day care provider for lodging and food the au pair consumes in your home are eligible for reimbursement. Au pair agency fees and/or transportation fares are not considered expenses paid for the care of the dependent, and are therefore not eligible for reimbursement. Be sure you complete and file the appropriate tax forms with the Internal Revenue Service.

What if my babysitter won’t give me her social security number?
In order to receive reimbursement, you must provide FBMC with your care giver’s social security number. Therefore, it is important that you discuss this program with your care giver before electing to participate.

Who determines whether a child or other dependent is mentally or physically incapable of self care?
You as the participant must determine if your dependent is physically or mentally incapable of self care. If audited, you may have to substantiate this to the IRS.

Can I pay for my mentally disabled child’s overnight expenses, since he’s at the school during the day?
No. This account is only for day care while you work–not for tuition for special educational schools, residential, or medical care.

Do my child’s summer camp expenses qualify if occasional sleep overs are a part of any overall day program?
Probably, but the camp program must be a day camp. Sleep over camps do not qualify and your child must be under age 13.

My elderly mother requires care. I pay someone to take care of her in her own home while I work. Is this an eligible expense?
Generally, no. The IRS requires that the person needing care reside in your home at least eight hours a day. The IRS regulations state that whether an expense is eligible or not depends upon the facts and circumstances of each case.

My twenty year old son is mentally disabled and lives in my home. We pay a neighbor to care for him while we work. Is this cost reimbursable?
Yes. If your disabled dependent is unable to care for her/himself, and your spouse also works, then the costs of caring for him/her in your home, or at a special day care facility, are reimbursable. The same rules apply if your spouse is disabled.

I have a disabled friend who resides with me and for whom I contribute a sizable portion of financial support. I cannot claim him as a dependent for income tax purposes. Can I establish a Dependent Care Advantage Account for his care while I’m at work?
Yes, as long as you maintain a household (i.e., furnish over half the cost of maintaining the household) in which the disabled individual resides at least eight hours a day. Such expenses for the well-being and protection of the disabled individual incurred while you are at work are eligible for reimbursement under the DCAAccount. The disabled individual can be an extended family member or a non-relative who lives in your household for the tax year as a family member.

If I should incur an eligible change in status allowing me to enroll in the Flex Spending Account during the year, how far back may I calculate my expenses?
Should you join after the open enrollment period through an eligible change in status, your expenses would be calculated from the date we receive your change in status form. The IRS regulations will not permit reimbursement of retroactive expenses.

What if my child turns age 13 during the middle of the Plan Year?
The IRS regulations permit you to cancel your enrollment in the DCAAccount when your child reaches age 13.

My child was expelled from daycare because of a biting habit and is now being cared for by a family member, free of charge. Can I terminate my DCAAccount?
Yes, since there has been a significant change in the coverage initiated by your care provider. A participant may elect to terminate his or her salary reduction for care expenses if the coverage provided by an “independent third party” (your daycare center) is significantly curtailed or ceases during the period of coverage.

What if I’m laid off, fired or quit my job?
If you leave State service during a Plan Year, you retain your account through the end of that Plan Year. This means that although you cannot make any additional contributions to your account, you have until December 31 of the Plan Year to incur eligible expenses–and until March 31 of the following year to file an eligible claim.

What if my spouse and I have separated, but are not yet “legally” separated? Is that a “Change in Status?”
No. But other circumstances typically surrounding such a separation might qualify, such as a change in employment schedule. In addition, the maximum allowable tax-free reimbursement could be reduced, for example, from $5,000 to $2,500 if you and your spouse use the tax filing status of “Married Filing Separately.”

However, even in the situation described above, if you provide more than one-half the household support for a dependent who lives in your household more than six months in a year, you may be eligible for “Head of Household” tax filing status, which would allow the $5,000 maximum reimbursement for dependent care expenses.

If I become legally separated, how does this affect participation in the plan?
A participant who is legally separated is not considered married for purposes of the DCAAccount and may be reimbursed up to $5,000 of eligible expenses—even if filing a separate tax return. Legal separation would constitute a change in status.

Can my spouse and I both use the $5,000 limit?
No. There is a $5,000 limit on expenses that may be reimbursed each calendar year for married couples who file a joint return ($2,500 limit for each spouse per year if you file separate income tax returns). If your spouse’s employer offers a similar plan, remember you cannot be reimbursed for the same expenses by two plans.

My spouse is a student. Can we participate in the DCAAccount?
Yes. However, the maximum you can contribute to the DCAAccount is determined by the earned income of you and your spouse. As a student, the IRS considers your spouse to be gainfully employed. Earned income is calculated as not less than $200 for one qualifying dependent and $400 for more than one qualifying dependent for each month the spouse is a student.

For example, if you have two children in need of care, and your spouse is a student nine months out of the year and earns no other income, the maximum you can put into the DCAAccount is $3,600.

How do I know if the Federal Tax Credit or the DCAAccount is better for me?
Complete the Tax Comparison Worksheet that is included in the Enrollment Kit. Because of variations in filing status, income level, number of dependents and other factors, it is important that you determine which would be more beneficial for you.

Can I take the Federal Tax Credit and be in the DCAAccount, too?
You cannot use the Federal Tax Credit and the DCAAccount for the same expenses. However, if you underestimate your DCAAccount contribution, the tax credit can be used for any remaining expenses up to the maximum allowed by the tax credit provisions.

The amount reimbursed through your DCAAccount reduces dollar-for-dollar the amount that can be used to calculate the Federal Tax Credit.

Will my dependent care deductions be reported to the IRS?
Yes. Your deductions will be reflected on your W-2 form in Box 10. You must file IRS Form 2441 with your tax return.

I am a member of the DCAAccount Program and have enrolled for the full $5,000. I know I need to file form 2441 with my federal return. Do I need to file the New York State form IT 216 with my state income tax return?
No. You need only file IT 216 if you are filing for the income tax credit from New York State.

Will my Flex Spending Account deductions continue if, due to long-term illness, I begin drawing upon my social security benefit?
No. Flex Spending Account deductions can only be taken from checks issued through the Office of the State Comptroller. Additionally, if you are collecting disability payments through the Income Protection Plan (IPP) no deductions can be taken, since those funds come directly from the insurance company.

I am divorced, and have physical custody of my seven year old daughter. However, my ex-husband has retained the legal right to claim an exemption for our daughter for income tax purposes. Am I eligible to participate in the DCAAccount?
Yes. If a participant has physical custody of a child under the age of 13, but has granted the non-custodial parent the right to claim the child as a dependent, the child is considered your dependent for the purpose of participation in this program.