Employees who are eligible to participate in the pre-tax Flexible Spending Accounts (FSAs) are those who receive UCAR contributions toward the cost of their medical and dental benefits. Those employees are regular, full-time and part-time; regular, term, full-time and part-time who have appointments for longer than six months; and term, postdoctoral employees. Flexible spending accounts are administered by WageWorks.
WageWorks has a website for participants located at www.wageworks.com. You can look up your account balance as well as current information. The online statement is easy to read and offers “drill-down” access to detailed information. Account information is updated every 24 hours.
All Flexible Spending Account expenses can be paid with the Health Care Debit Card, issued by WageWorks. Participants in the Health Care FSA will receive a WageWorks VISA debit card to pay for medical expenses. The card can be used instead of filing claims with WageWorks. The use of the card serves as submission of a claim and the receipt of reimbursement. Always save your receipts in case you are asked to verify that your transaction was qualified for payment. If a validation is requested, employees have the option of uploading receipts through the EZ Receipts Mobile Application, available free of charge through the Apple App Store, Android Market and Blackberry App World.
WageWorks will automatically provide the debit card, free, to all Health Care Spending Account participants only during Open Enrollment and to new participants throughout the year. If you prefer not to use the card, do not activate it. Simply destroy the debit card upon receipt.
Participants have the opportunity to receive their claim payment either by direct electronic transfer into their bank account or by check mailed directly to them. Direct deposit is elected by going to the WageWorks web site at www.wageworks.com or calling Customer Service at 1-877-924-3967. The claim forms are located on the Human Resources Forms Library.
You may enroll in the Flexible Spending Accounts even if you do not participate in a UCAR medical or dental plan.
The UCAR pretax spending accounts allow you to pay for health and dependent care expenses with dollars that would ordinarily go to pay taxes. The two spending accounts UCAR offers are:
Employees make pretax contributions to either of the spending accounts through automatic payroll reductions. This means part of your pay is deposited to your account before Federal, most of the 50 states’ and Social Security taxes are deducted. Then, your reduced pay is taxed. Depending on the amount you contribute, this may make a significant difference in your spendable income, since taxes are withheld on a lesser amount.
Flexible Spending Accounts may save you money. However, be cautious when you decide the amount of your pretax contributions. In exchange for the favorable tax advantages spending accounts receive, the Internal Revenue Service requires that any money left in spending accounts at the end of the year be forfeited. The money deposited in either of the spending account(s) cannot be returned to you or transferred to another spending account. To get the full benefit of any tax savings, it is important to accurately and conservatively plan your predictable expenses to ensure you will spend the money by year-end.
NOTE: You must enroll each year to continue to contribute to a Health Savings Account or either Flexible Spending Account. A prior year’s enrollment will not satisfy IRS regulations! Each year, you must specify how much you want to contribute. If you are planning on taking advantage of the HSA or the Flexible Spending Accounts, you must make your election(s) by your enrollment deadline.In addition, if you retire or terminate employment from UCAR, you will be reimbursed from your spending account for any eligible expenses you incur, up to the date of your termination. Any money left in your spending account that is not used by your termination date will be forfeited unless you continue (through COBRA) to make after-tax contributions after you leave UCAR.
Your eligible expenses must be incurred in the same plan year (January 1 through December 31) as your contributions. At the end of the year, you will have a grace period to submit any claims for which you have not yet been reimbursed, as follows:
Once you have elected to contribute to a spending account, a change in the contribution level is not permitted during the plan year unless the change is due to a change in work or family status. A change in status is a change in: legal marital status, number of dependents, employment status, and eligibility status. Notification of a change in status must be reported to the UCAR Human Resources Department within 30 days of the event.
In some cases, individuals can use their health and/or dependent care expenses to reduce taxes when they file their Federal income tax return. The spending accounts offer an alternative. However, any expenses that are paid through pretax spending accounts cannot be used towards calculating a deduction or tax credit on your Federal income tax return.
If you decide that one or both of the spending accounts will work to your advantage, enter the amount you want to contribute each pay period to each spending account, on your enrollment form.
Here are more details for each spending account.
The Health Care Flexible Spending Account
The Smart Choices Health Care Flexible Spending Account helps you pay for your out-of-pocket health care expenses that are not 100% reimbursed or are ineligible for payment by your medical and dental plan. For example, eligible expenses include:
In fact, the Health Care Spending Account may be used to pay any health care expense the Internal Revenue Service allows as a deduction on your Federal income tax return. A list of allowable and non-allowable expenses for Federal income tax returns is provided in your information kit. Expenses that are not eligible for reimbursement from your Health Care Spending Account are health insurance premiums or contributions to other health arrangements, such as the coverage under a spouse’s plan. Also, the IRS does not permit duplication of coverage. All applicable medical charges must first be submitted for payment to any insurance plan you may have.
You can contribute from $130 to $10,000 during the plan year to your Health Care Spending Account. New employees who enroll in the Health Care Spending Account may contribute up to $10,000 during the calendar year in which they first become enrolled.
Reimbursements from Your Health Care Spending Account
Eligible expenses are fully reimbursed up to the total, projected amount you would contribute by year-end at any time during the year.
Example: Annual contribution = $10,000. Claim submitted on April 1 of the plan year, for $5,400, is paid in full.
If you opt not to activate and use the debit card with your Health Care Spending Account, you must file an FSA claim form. All claims must include a signed claim form with a copy of a third party receipt, bill or statement showing an amount and proof of incurment (not payment). WageWorks commits to paying all claims seven business days from the date the claim is received or the date the company contribution to pay the claim is received. Each time you receive a reimbursement check, a statement will be provided showing your current balance and the year-to-date activity of your spending account. Current information is also available on WageWorks’ website at www.wageworks.com.
NOTE: Elective cosmetic procedures are not eligible for reimbursement through the health care spending account.
NOTE: Make sure you calculate your bi-weekly contributions accurately, as the amount cannot be changed unless a qualifying change in status occurs.
NOTE: HSA participants may use the Health Care Spending Account only to pay for certain expenses, such as those for vision and dental care.
The Dependent Care Flexible Spending Account
Smart Choices Dependent Care Spending Account may help you pay for eligible dependent care services that allow you to work. Work-related dependent care expenses are reimbursed through the spending account if:
If your spouse is not working and is not disabled or a full-time student, you will not be able to participate in the Dependent Care Spending Account.
You may also be able to use the spending account if you are divorced or legally separated and have custody of your child(ren) most of the time, even if your former spouse claims the child(ren) for income tax purposes. However, please check with your attorney or tax advisor to ensure this option will be allowable for your situation.
Care for eligible dependents can be provided inside or outside your home by anyone except your spouse, children under age 19 or individuals whom you claim as dependents on your tax return. Eligible dependents (those whom you can claim as dependents for income tax purposes) include:
The Internal Revenue Service requires that you report the name, address and Social Security or tax identification number of the dependent care provider on your tax return. Certain charitable organizations are exempt from providing tax identification numbers. If the required information is not reported when you file your Federal income tax return, you will be responsible for paying the appropriate taxes. This information will be requested on IRS Form 2441 (if you file Form 1040) or Schedule 1 (if you file 1040A).
An eligible provider can be a family member as long as he/she is willing to provide their Social Security number as proof to the IRS of providing this care. A dependent child, age 18 or older, can be an eligible provider as long as the parent does not claim that dependent child as a deduction.
You can contribute from $130 to $5,000 during the plan year to your Dependent Care Spending Account. New employees who enroll in the Dependent Care Spending Account may contribute up to $5,000 during the year in which they first become enrolled. However, under certain circumstances, there are limitations on the amount that can be contributed to the spending account:
In addition, if you are married, the Dependent Care Spending Account can reimburse you no more than the earned income of the lesser-paid spouse. For example: if you earn $25,000 each year and your spouse earns $3,200 each year, whether full-time or part-time, your spending account reimbursement is limited to $3,200. If your spouse is disabled or a full-time student, the IRS assumes that your spouse’s income is $2,400 if you have one dependent, or $4,800 if you have two or more dependents.
The Dependent Care Spending Account vs. the Federal Tax Credit
There is a Federal tax credit for child and dependent care. In some states, the Federal credit yields greater tax savings than the Dependent Care Spending Account. However, with the 5% Colorado state income tax savings, the Dependent Care Spending Account always saves you more than the federal tax credit, if you are a UCAR employee working and filing taxes in Colorado.
You may be able to receive spending account reimbursements and use the Federal tax credit; however, the amount you claim for the tax credit must be reduced by the amount reimbursed from the spending account. If you are a non-Colorado employee, your individual situation will determine the method that is most tax-effective for you.
Reimbursements from Your Dependent Care Spending Account
Eligible expenses are fully reimbursed only up to the amount that is in your account at the time you submit the claim. Any amount over your account balance will be held and paid when you make additional payroll reduction contributions.
You must file an FSA claim form for reimbursement of dependent care expenses. All claims must include a signed claim form with a copy of a third-party receipt, bill or statement showing an amount and proof of incurment (not payment). WageWorks commits to paying all claims seven business days from the date the claim is received or the date the company contribution to pay the claim is received. Each time you receive a reimbursement check, a statement will be provided that shows your current balance and the year-to-date activity of your spending account. Current information is available on WageWorks’ website at www.wageworks.com.