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Spending Accounts Health Care & Dependent Care SHPS
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Spending AccountsHealth Care & Dependent CareSHPS
How Does it Work? • Employee chooses a monthly contribution amount • Pre-tax contribution is transferred into the Spending Account • Employee submits eligible expenses • Employee reimbursed with pre-tax dollars
General or Limited Purpose Health Care Spending Account • Maximum contribution: $420/ month (maximum of $5,040/ year) • Coverage for new employees is effective the first of the month following one full calendar month of employment • Monthly administration fee: $3.20 • Eligible medical care expenses include amounts paid for the diagnosis, cure, treatment, or prevention of disease, and for treatments affecting any part or function of the body. The expenses must be to alleviate or prevent a physical defect or illness • “Cosmetic procedures” are ineligible (face lift, hair transplant, hair removal (electrolysis), teeth whitening, liposuction)
General or Limited Purpose Health Care Spending Account • Employees may submit eligible expenses for your spouse (e.g. coinsurance payments; deductibles from another health plan) • It is illegal to submit expenses that have been paid by another insurance plan or reimbursed by another spending account • Children’s medical expenses covered under the employee, as well as the spouse’s, group medical coverage can be submitted • An Explanation of Benefits from both insurance carriers is required
Limited Purpose Health Care Spending Account • Employees must select if enrolling in a Health Savings Account • Only dental and vision costs that are not normally eligible under the General Purpose Health Care Spending Account are covered
Health Care Spending Account Debit Card • Employee must keep the EOBs and/or receipts • SHPS will request supporting documentation, normally every 2 months • EOBs and/or receipts along with the request letter from SHPS must be submitted for validation purposes • SHPS will submit validation letters online • If SHPS has the employee’s email address, requests will be emailed directly to the individual
Health Care Spending Account Debit Card • If documentation is not received after the validation request is issued, the card will be turned off (60 – 90 days) • An overpayment will be noted on the account • When a paper claim is received, a reimbursement will not occur. It will be deducted from the overpayment showing
Dependent Care Spending Account • Maximum contribution: $416/ month (maximum of $4,992/ year) • Coverage for new employees is effective the first of the month following one full calendar month of employment • Monthly administration fee: $3.20 • Reimbursement requests will be processed after services have been fully rendered • Reimbursement subject to account balance • Department must transfer contributions to SPA before account can be credited
Dependent Care Spending Account • Eligible dependents would include: • Children under age 13 • Spouse (if mentally or physically disabled) • Any other person who is a qualified IRS dependent, regardless of age, who is mentally or physically disabled
Health Savings Accounts
Health Savings Accounts • Tax-exempt account that can be used for qualified medical expenses not otherwise covered by the High Deductible Health Plan* • Qualified medical expenses include: • HDHP* Deductibles • Co-payments • Prescriptions and over-the-counter medication • Dental services • Vision Care • Must be enrolled in a High Deductible Health Plan (HDHP) • Cannot be enrolled in Medicare • Cannot be covered by another Health plan • Cannot be claimed as a dependent on someone else’s tax return
Health Savings Accounts • Funds are not subject to forfeiture; rollover from year to year • Maximum allowable contributions for Plan Year 2009: • Single: $3,000 • Family: $5,950 • Monthly service charge: $3.20 • Additional contributions to the HSA can be made outside normal payroll deductions • Contribution tickets are included with the HSA Welcome Kit to make post-tax contributions • It is the HSA account holder’s responsibility to ensure the total contributions do not exceed the maximum allowed by the IRS
Health Savings Accounts • Money in the HSA can be used for an emergency situation for a non-qualified expense • The distribution would qualify as taxable income • 10% penalty tax would be assessed • NOTE: Agencies should not take a December payroll for January coverage, unless the employee already had an HSA account. • Investment opportunities are available through HSA administrator (JP Morgan Chase) • Must maintain a $2,000 minimum account balance to qualify • Investment transfers, contributions changes, and change of beneficiaries can be made anytime during the Plan Year • Catch up provision is provided • Age 55 or older may contribute an additional $800 per year above the HSA maximum • Tax Forms required for the HSA: • Distributions reported on Form 1099 SA • Contributions reported on Form 5498 SA
