Benefits

NCAS - Pennsylvania

An Independent Licensee of the Blue Cross and Blue Shield Associates
Medical and Dependant Care Flex Spending Accounts
Questions & Answers

What is a Flexible Spending Account?

A Flexible Spending Account (FSA) is a tax effective way to pay for certain medical care or dependent care expenses with pre-tax dollars. You don't pay Federal income, Social Security or, in some cases, Pa.. Income taxes on amounts you contribute to FSA's.

 

What type of FSA's may I participate in?

Medical Care - established to pay for health-related expenses that are not eligible for full reimbursement through any medical, dental or vision plan or through any other source.

 

Another type of FSA you may participate in is:

Dependent Care - established to pay expenses incurred for the care of a child or dependent, disabled adult which enables you (and your spouse if you are married) to work.

 

Are Flexible Spending Accounts legal?

Yes, under Section 125 of the IRS code, eligible employees can allocate pre-tax dollars to separate reimbursement accounts to pay for unreimbursed medical or dependent care expenses.

 

When can I join?

You may enroll in this Plan once a year during the annual open enrollment period which will be held toward the end of each year for the upcoming Plan year.

 

How much can I contribute to my Medical FSA?

Each year your employer will announce the maximum amounts you can contribute to this fund.

 

What is the maximum contribution I can make to my Dependent Care FSA?

Overall limit of $5,000 annually ($2,500 if single or married filing separately) Limit of $2,400 for one child and $4,800 for two or more children annually where the employee's spouse is a student or incapable of self-care. For a working couple dependent care expenses cannot exceed the earned income of either spouse.

 

If I join, may I change or discontinue my contributions?

You may be able to change or discontinue your contributions ONLY if your family or employment status changes, i.e.; marriage, divorce, birth, adoption, loss of a spouse's employment, change in number of hours worked. Other than for these reasons, you c an only make changes or stop participating ONCE A YEAR - during open enrollment period.

 

What are the important features I should know about the Medical Flexible Spending Account program?

Reimbursements are paid as soon as incurred and submitted, up to the annual amount deferred. If you should terminate employment, you can continue making premium contributions on an after-tax basis to submit claims for expenses occurring after your term ination. If you elect not to continue, you can only submit claim expenses which occurred prior to your term date.

 

What are the procedures for getting money out of your FSA?

After you incur an eligible expense you must submit a voucher form and a copy of an EOB (Explanation of Benefits) or receipt. A reimbursement check from your FSA will be issued for the expense.

 

What happens if the voucher form I submit exceeds the amount of money in my FSA?

Medical Care Accounts - A reimbursement check will be prepared for the actual amount of expense, up to your annual election.

Child/Dependent Care - A reimbursement check will be prepared for the amount of expense incurred up to the balance in your account at the time the voucher is received.

 

Where does the forfeited money go?

It is used to help defray the costs of administering the Plan.

 

What records do I keep for tax purposes?

You should maintain the same records necessary for preparation of your year-end tax return.

 

What is a premium conversion plan?

A premium conversion plan is a way of providing you with significant tax savings by converting your insurance premium payments from after-tax to pre-tax payments.

 

How does the premium conversion plan work?

If you pay for dependent medical coverage, a premium conversion plan allows you to make these payments on a pre-tax basis. These premium payments are considered salary reductions and, as a result, you owe no tax on the premium amounts. You walk aw ay with more dollars in your paycheck! It's easy-no claims to submit. Payments are still automatically deducted from your paycheck.

 

What types of insurance premiums can be purchased as part of the Plan?

 

When are salary redirections and benefits selected?

The Premium Conversion Plan will operate on a 12 month basis, the same as the Flexible Spending Accounts. As in the case of the FSA's, prior to the beginning of each Plan year, you will select which benefits (if any) you want and how much money you wa nt to go to each benefit.

 

Can I change my mind during the Plan year?

The same rules apply to the Premium Conversion Plan as they do in the case of the FSA's. You must wait until the next plan year unless a "change in family status or employment" occurs as outlined previously.

 

Does my FSA and/or Premium Conversion contributions affect my allowable annuity contributions?

That will no longer be the case. Effective January 1, 1998, employee contributions to the Medical or Dependent Care FSA or Premium Conversion plans will no longer affect the maximum tax deferred allowance calculations for the Retirement Plan. Therefore, the amount you contribute to the FSA or Premium Conversion will have no effect on the maximum amount you may tax defer into the retirement accounts.

Any questions about submission procedures, eligible expenses, etc., please call NCAS Pennsylvania at 1 800-635-8832.