Flexible Spending Accounts
Flexible spending accounts (FSAs) are an excellent way to set aside money on a pre-federal, state and social security tax basis, to pay for qualified dependent day care and/or out-of-pocket health care related expenses (premiums excluded). FSA dollars must be used for qualified dependent and/or health care expenses incurred during each calendar year. Under IRS regulations, any expenses incurred through December 31 and not filed for reimbursement from current year contributions by the next March 31 will be forfeited; therefore it is wise to plan carefully when calculating how much to set aside.
Note: FSA contributions do not continue from one calendar year to the next. You must enroll each year, during annual enrollment to continue participation.
Dependent Day Care Flexible Spending Account
This plan benefits employees with dependent children under age 13, an incapacitated spouse, or dependent adult who lives with the employee at least 8 hours a day. With this account, you are reimbursed with pre-tax payroll contributions for qualified child and/or dependent adult care expenses. Services must be incurred and contributions must be in the account before reimbursements are made.
FSA or Tax Credit?
In most cases, participation in the dependent care FSA is done in lieu of taking a child care tax credit; however, depending on the amount of money spent each year for dependent care, employees may benefit from both. Careful planning is the key to maximizing the benefits of this FSA.
Monthly Contribution Limits
Minimum, $10; maximum, $416.66 ($5,000 per year). If both you and your spouse can contribute to this or a similar plan, the maximum family contribution is $5,000 per calendar year. Use the DCFSA Worksheet (see page 35 of the NCFlex Enrollment Guide to determine your expenses and calculate how much you may want to deposit.
Health Care Flexible Spending Account
Setting aside pre-tax payroll contributions for the Health Care FSA is an excellent way to pay for qualified out of pocket health care related expenses not covered by dental, medical and/or vision insurance plans (premiums excluded). The HCFSA can also be used for certain over the counter medications, devices and other expenses. Employees have access to the total amount elected for the calendar year as of January 1 and reimbursement for qualified expenses may occur prior to payroll contributions. The HCFSA account may be used for employee and qualified dependent expenses.
Monthly Contribution Limits
Minimum $10; maximum, $350 ($4,200 per year). Use the HCFSA Worksheet (see page 31 of the NCFlex Enrollment Guide (pdf)) to determine your expenses and calculate how much you may want to deposit.
Reimbursements
The days of filing paper claim forms and waiting for the check to arrive in the mail are over! The NCFlex Convenience Card® is a Visa debit card that links directly to your FSA funds and allows for immediate payment of qualified expenses without the hassle of paper claims. For those times when a claim form is filed, reimbursements are conveniently deposited directly into the same account as your NC State payroll.
Enrollment
Employees must enroll within 30 days of first becoming eligible (typically 30 days from the date of hire); otherwise, enrollment and changes are permissible with a qualifying status change event or during annual enrollment.
Enrollment in NCFlex benefit plans is a paperless process, through the NCFlex Online Enrollment System. Once the initial 30-day enrollment window has expired, the next available window of opportunity occurs during annual enrollment or during a qualifying status change event. Federal laws regarding pre-tax benefit plans prohibit changing or canceling participation during the year unless a qualifying status change event occurs.
Effective Date of Coverage
NCFlex benefit plans become effective on the first day of the month following the date of enrollment.
