Deb Fisbeck, Real Estate Agent
Keller Williams Lincoln
Plan in which participant (employee) utilizes spending accounts to pay for health care costs not subject to reimbursement from a health insurance policy or health care provider. The reimbursement is for the participant as well as the participant's dependent (s). Before the plan year (usually July 1 through June 30) begins, the participant decides the amount he or she desires to contribute to the health care account and/or the dependent care account. The maximum amount that can be contributed to the Health Care account is $2000 per year and $5000 to the Dependent Care account. The minimum contribution each year to each account is $300. Any amount, subject to the maximum and minimum, may be chosen by the participant to be deducted in equal installments from the participant's employment income during the plan year. The amount chosen is deducted before taxes are subtracted, thus making the contribution tax-free. As health care expenses are paid by the participant, the participant files a claim with the employer and is reimbursed from the Health Care or Dependent Day Care account. At the conclusion of the plan year, under IRS regulations any funds remaining in either the Health Care or the Dependent Care account are forfeited by the employee; the employer receives the forfeited funds. The particulars of the Health Care account are as follows:
- Participant and dependent health care expenses that are not covered under an insurance policy or health care provider agreement are paid for by the participant. The participant in turn submits a claim to the employer for that amount and is reimbursed by the employer from the Health Care or Dependent Care account.
Any funds remaining in the Health Care or Dependent Care account at the end of the plan year are forfeited by the participant to the employer.
The particulars of the Dependent Care account include those dependent care expenses that are associated with the participant's work requirements: Day care costs for children age 12 and less; Education-related expenses for children who have not yet attended the first grade; Day care costs in the home to include housekeeping expenses; Licensed day care expenses to include those associated with babysitting; Day care costs associated with individuals who reside with the participant and obtain at least half of their monetary support from the participant; Day care costs associated with the participant's dependents who are physically or mentally incapable of caring for themselves, such as mentally retarded individuals or elderly parents.
- Employees who work at least 30 hours per week are eligible to participate in the plan.
- An open enrollment period is held during the plan year. During this time, the employee can elect whether or not to participate in the plan, to open the Health Care and/or Dependent Care accounts, and the amount to be contributed from each check to each account, subject to a minimum contribution of $300 per year for both accounts and a maximum amount per year of $2000 and $5000 for the Health Care account and the Dependent Care account, respectively.
- The Health Care Account and the Dependent Care accounts are separate entities. As such, monies from one account cannot be transferred to the other account.
- Changes in the elections may be made only during the open enrollment period each year or when a qualifying change in the participant's family status occurs. A qualifying change occurs when a child is born or adopted; marriage, divorce, or legal separation occurs; dependent dies or becomes disabled; and the employment status of the participant and/or the participant's spouse changes.
- The participant will receive on a quarterly basis a listing of the activities in the account (s). Notification is sent to the participant in advance of a possible forfeiture of funds in the account (s) at the end of the plan year.
- Health care claims are paid up to a maximum amount equal to the contribution into that account each year less any reimbursements paid out of the respective account during the plan year.
- The participant is reimbursed for those health care expenses not covered under a health insurance policy or by a health care provider to include: non reimbursed medical expenses resulting from charges due to hospital, physician, dental, orthodontia, vision, and prescription drug expenses incurred; deductibles and co-payments resulting from charges due to hospital, physician, dental,orthodontia, vision, and prescription drug expenses incurred; routine physicals; rehabilitation services over a long-term period to include drug and alcohol addiction; health care expenses that meet medical expense requirements for federal income tax purposes.
- Deductible expenses for the Health Care Spending account include: medical deductible (amount under COMPREHENSIVE HEALTH INSURANCE); co-payment (medical, dental, orthodontia); prescription drugs unless otherwise covered; routine physical examinations unless otherwise covered; vision examinations.