employees / Procedures / Flexible Spending Account

Flexible Spending Account

Summary

 The Flexible Spending Account provides a mechanism to specific out-of-pocket costs with tax-free dollars (deducted from the employee’s paycheck before taxes). This benefit includes a health care account and a dependent care account.

Procedures

General information

Employees who are eligible for health insurance benefits from the College are also eligible to elect participation in the health care and/or the dependent care accounts. However, you cannot participate in a health care account if you have a Health Savings Account (HSA).  Participation must be pre-elected for each plan year during open enrollment of the preceding year. New employees have 31 calendar days from the date of hire to enroll into the Plan. Once an annual election is made, it cannot be stopped or altered unless a qualifying event occurs. The annual amount is deducted on a pre-tax basis from each payroll that occurs during the plan year. The amounts deducted are set aside in separate accounts for each participating employee.

Please refer any questions regarding flexible spending reimbursements to the Human Resources Department at extension 9106. Also, please review the flexible spending plan description for a comprehensive description of the plan.

Health care account

To receive reimbursement under the health care account, participating employees can use their plan’s debit card, upload claims online or submit claims forms by fax/mail.  Some reimbursements will require documentation to substantiate the eligibility of the health care expense.  Below are the four criteria’s determining the eligibility of health care expenses.

    1. The first criterion in determining the eligibility of an expense is whether the date of service occurred during the plan year. The date that the insurance company processed the claim or that payment was made to the service provider is not relevant.
    2. Secondly, the expense cannot be covered or reimbursed by any other insurance or health care plan. This includes any medical, vision, hearing or dental insurance coverage sponsored by Delta College. The expense also cannot be covered or reimbursed by any insurance plan that the employee's spouse or dependents may have.
    3. A third requirement is that the patient must be the employee, the employee's spouse, or a legal dependent qualifying as a deduction on the employee's tax return.
    4. The fourth criterion involves the nature of the service itself, specifically, that the type of service provided is tax-deductible under IRS regulations. Refer to IRS Publication 502 for a detail listing of tax-deductible health care expenses.
      For a more in-depth explanation of eligible expenses, refer to the flexible spending plan description, which is available through the Human Resources Office.

Dependent care account

Employees participating in the dependent care account receive reimbursement for eligible dependent care expenses by completing the request form. Although proof other than a fully completed request form is not required for reimbursement, receipts or copies of checks are strongly recommended because, in the event of an IRS audit, much of the proof that the IRS may ask to see will be readily available.

There are four main criteria’s determining the eligibility of dependent care expenses. All participating employees should review IRS Publication 503 for a complete understanding of eligible dependent care expenses.

    1. The first requirement is that the service was provided during the plan year, or subsequent grace period, which is January 1 through March 15 of the following year. This refers to the actual date of the service. Only the balance in each employee's account as of the date of reimbursement is available for disbursement.
    2. The second criterion is whether the expense was incurred for a qualified dependent, as defined by the IRS. Specifically, the qualified dependent must (1) be a member of your household, (2) be under the age of 13, or physically or mentally incapable of caring for himself or herself, (3) regularly spend at least 8 hours of each day in your household, and (4) be allowable as an exemption on your federal tax return, with some exceptions in cases of divorce or separation.
    3. Thirdly, the expense must be necessary to enable you and your spouse, if married, to be gainfully employed or actively search for gainful employment.
    4. Finally, the expense cannot be covered by any other dependent care plan or source, nor can it be taken as a credit on your tax return.

Timelines
Calendar year

Participation
All regular full-time employees

Revision/review dates
01/11, 12/18, 3/20, 9/21