About the Flex Spending Account
What is the Flex Spending Account?
The Flex Spending Account (FSA) offers three negotiated benefits to state employees - the Dependent Care Advantage Account (DCAA), the Health Care Spending Account (HCSA), and the Adoption Advantage Account. They are types of flexible spending accounts, administered in compliance with Sections 125 and 129 of the Internal Revenue Code, that give you a way to pay your dependent care, health care, or adoption expenses with pre-tax dollars. Enrollment in the FSA is voluntary - you can decide to enroll in any or all of the benefits and choose how much to have taken out of your paycheck to pay for your eligible expenses.
There are no fees for employees who participate in the FSA program. The FSA is funded by the Governor’s Office of Employee Relations and Work-Life Services in cooperation with the state public employee unions. The Legislature and Unified Court System also contribute on behalf of their employees.
The State of New York retains the services of WageWorks, an FSA administrator to manage the Flex Spending Account.
The FSA administrator reviews and reimburses claims and provides customer service and accounting services. Flex Spending Account participants submit all claims for reimbursement directly to the FSA administrator.
During the plan year, the FSA administrator will provide you with your account balance with each reimbursement check or direct deposit stub. You will also receive quarterly and year-end statements that detail the activity in your account.
Why Should I Enroll?
If you are paying for dependent care expenses in order to work, have medical expenses that are not covered by your health insurance plan, or are planning to finalize an adoption, you are paying for those expenses with dollars that have already been taxed. By enrolling in the FSA, you will pay for your dependent care or health care expenses with whole dollars—before federal, state, and social security taxes are taken from your salary. Estimate your savings by using the tax calculator. You will also save on your adoption expenses because you will pay lower federal and state taxes due to your pre-tax contributions (where applicable).
How Does the Flex Spending Account Work?
The FSA is easy to understand and to use. You may choose to enroll in any or all of the three benefit choices. This is how it works:
During the open enrollment period, use the HCSA and DCAA worksheets to estimate what your out-of-pocket health care and dependent care expenses will be for the calendar year. Based on your estimate, decide how much of your salary you want to set aside in either or both accounts. For the Adoption Advantage Account, estimate your qualified adoption expenses for the plan year. Submit your enrollment application online or by calling the toll-free number before the open enrollment period ends.
Each pay period, a regular portion of these amounts will be deducted tax-free from your biweekly paycheck. These deductions are made before your federal, state, social security, and city income (if applicable) taxes are calculated. The contributions to your FSA are deducted tax-free from your gross pay.
Forfeiture Rules—“Use It Or Lose It”
Because of the tax advantages of the FSA, the Internal Revenue Service (IRS) has strict guidelines for its use. One of these guidelines is commonly known as the “use it or lose it” rule. Put simply, if you contribute pre-tax dollars into your FSA account and then do not have enough eligible expenses during the plan year to equal the amount you contributed, you will lose the balance remaining in your account when the plan year ends. That is why it is important to plan carefully before deciding how much to contribute. With careful planning, you can minimize the risk of losing any of your contributions. Participants have until March 31, 2021 to submit any eligible unreimbursed expenses from the 2020 plan year. But remember—if you plan properly, you are unlikely to forfeit any of your funds.
In addition, if you enroll in more than one FSA benefit, funds can’t be transferred or commingled between accounts.
Effect on Other Benefits
Social Security Tax (FICA)
Contributions to the FSA may reduce your social security taxes. If so, based on current social security law, social security benefits at your retirement age may be slightly less as a result of your participation in the FSA program. The effect will be minimal and would likely be offset by the amounts saved in taxes today. If you are concerned about this, contact the Social Security Administration at 1-800-772-1213 or visit www.ssa.gov.
New York State Pension
Contributions to the FSA have no effect on your New York State pension contributions or benefits.
Most employees’ contributions to the New York State Deferred Compensation Plan will be unaffected by participation in the FSA program. In some cases, however, participation in the FSA program may affect you. The percentage you contribute to the deferred compensation plan will be applied to a lower salary amount as a result of your FSA contributions. Since such contributions are made as a percentage of salary, your deferred compensation contribution may be lower, depending on the amount of your annual salary and the amount you currently contribute to your deferred compensation plan.
SUNY Deferred Annuity Plan
Contributions to the State University of New York’s tax-deferred annuity plan are not affected by participation in the FSA program.
Changing Your Coverage
Am I permitted to make election changes after the plan year begins?
If you have a qualifying event, you may be able to make a change to your FSA election by submitting a change in status application.
Can I enroll during the plan year?
If you have a change in status event that occurs after the open enrollment period ends, you may be able to enroll during the plan year. Please refer to the respective HCSA and DCAA sections for specific information on changes in status.
If your change in status, claim, or other request is denied, in full or in part, you have the right to appeal the decision by sending a written request to the FSA administrator. Contact customer service for information on how to submit your appeal.
Your appeal must include:
- The name of your employer – State of New York
- The date of the services for which your request was denied
- A copy of the denied request
- The denial letter you received
- Why you think your request should not have been denied
- Any additional documents, information, or comments you think may be relevant to your appeal
Your appeal will be reviewed once it and the supporting documentation are received. You will be notified of the results of this review within 30 business days from receipt of your appeal. In unusual cases, such as when appeals require additional documentation, the review may take longer than 30 business days. If your appeal is approved, your account will be adjusted as soon as possible. Appeal decisions are based upon whether your extenuating circumstances and supporting documentation are consistent with the FSA rules and IRS regulations governing the plan.
How Do I Submit My FSA Expenses?
After you have received services and incurred eligible expenses, you can choose from several options to be reimbursed for your expenses.
Using your smartphone or mobile device
With the EZ Receipts mobile app from WageWorks, you can file and manage your claims on the spot, with a click of your smartphone or mobile device camera. After you download the free app to your smartphone or mobile device, just snap and submit photos of your receipts, making it easy to verify transactions later. You can even let daycare providers sign eligible expenses directly within the app.
Your WageWorks Healthcare Card
The WageWorks® Healthcare Card, a preloaded debit card, is a quick and easy way to pay for eligible healthcare products and services right from your Health Care Spending Account. Use your Card instead of cash or credit to pay for eligible services, goods, and prescriptions at health care providers, pharmacies and most general merchants. It’s easy to just swipe and go. In most cases, card transactions are automatically verified, but save your receipts with the EZ Receipts mobile app in the event verification / documentation is required. Please note that the Card can’t be used to pay for dental, orthodontia, dependent care, or adoption expenses.
Paying Your Provider Online
You can pay many of your eligible health care and dependent care expenses directly from your FSA account with no need to fill out paper forms. It’s quick, easy, secure and available online at any time. After you log into your FSA account, click Submit Receipt or Claim, then request Pay My Provider from the menu and follow the instructions. Make sure to provide an invoice or appropriate documentation. When you’re done, WageWorks will schedule the checks to be sent in accordance with the payment guidelines. If you pay for eligible recurring expenses, follow the online instructions to set up automatic payments.
Filing a Claim Online
You also can file a claim online to request reimbursement for your eligible FSA expenses. Log into your FSA account and click Submit Receipt or Claim, then select Pay Me Back. Fill in all the information requested on the form and submit. Scan or take a photo of your receipts, explanation of benefits (EOBs) and other supporting documentation, then attach the documentation to your claim by using the upload feature.
Most claims are processed within one to two business days after they are received, and payments are sent shortly thereafter.
If you prefer to submit a paper claim by fax or mail, download a Pay Me Back claim form from this website and follow the instructions for submission.
After the plan year ends on December 31, you have until March 31 to submit claims for services rendered from January 1 through December 31 of the preceding year.
Special Rules for HCSA Claims
Submit claims after you have received health care services and know the amount of the bill for which you are responsible. Include a statement from your health insurance plan showing the amount of the medical expense that has not been reimbursed or attach copies of receipts, billing statements, invoices, or other appropriate supporting documentation from the health care provider. Canceled checks or credit card receipts will not be accepted. The receipts, billing statements, or invoices must include the:
- Name of the person for whom the service was provided
- Name and address of the health care provider
- Amount charged for each service
- Type of service and the date performed
- If a prescription drug expense, a receipt containing the prescription number and drug name
Special Rules For Orthodontia Claims
If you are on a monthly payment plan for orthodontia services, you may submit a request for reimbursement after each monthly payment is due, even if no office visit takes place during that month. If you pre-pay the entire orthodontia expense up front when treatment begins, you can’t be reimbursed for the entire amount at one time. Rather, the amount will be pro-rated and reimbursed over the course of treatment. You will need to submit a claim for the pro-rated monthly amount on or after the beginning of each month of service, since you will not be reimbursed automatically. A copy of the orthodontia contract must be included with your first claim for the plan year.
Special Rules for DCAA Claims
The FSA administrator will review your claim and if it is complete, will authorize it for payment up to the amount of money accumulated in your account.
If you submit a claim for more money than you have in your DCAA, the balance will be paid automatically when the funds are deposited from your next payroll deduction.
If dates of service for which you are seeking reimbursement begin in one plan year and end in the next plan year, a claim for each year is required. The claim must include the provider’s name, address, and taxpayer ID number (or social security number), the period during which the services were provided, and the amount you were charged. Submit a receipt or invoice with the claim form, or you can have your provider countersign the form with you.
Claims are paid after services are received, regardless of when you pay for the expenses. You can submit claims as often as you would like.
Flex Spending Account FAQs
Will money in the FSA ever be subject to taxes, or is it free from taxes?
Money used for qualified expenses from the FSA is free from taxes.
How much money will I save by enrolling in the FSA program?
Your savings will be based upon your individual income and tax filings. Estimate your savings by using the tax calculator.
Does the State guarantee the tax benefits under the FSA?
No. The State cannot guarantee that a participant will receive the intended tax benefits. It is up to each participant to make sure that contributions are made for eligible expenses within the legal and plan limits.
What responsibilities do I have to ensure the intended tax benefits of the program are received?
You should make sure that contributions to the FSA will only be made for eligible expenses, for qualifying individuals, up to the legal or plan maximum, and for services provided in the same plan year the contributions are made.
Will I save more by taking a deduction on my income tax?
You need to determine whether taking a tax deduction is more beneficial than using the FSA. According to the IRS, only medical and dental expenses that exceed 7.5% of your adjusted gross income can be deducted from your income taxes. Most people do not have expenses high enough to qualify for this deduction. For work-related dependent care expenses, the tax credit amount is determined by applying a percentage to your total dependent care expenses. In addition, money set aside through your HCSA and DCAA is exempt from FICA taxes. This exemption is not available on your federal income tax return. When it comes to adoption-related expenses it is recommended that you only use the FSA for expenses in excess of the tax credit amount. If you enroll in an adoption FSA, you will save on federal and state taxes (where applicable).
If I reside outside of New York State, how will my participation in the FSA be affected?
Most states follow the federal rules; however, some states may tax the FSA contributions. You must comply with the laws of the state where you reside.
Do contributions to my FSA reduce my income for purposes of the Federal Earned Income Tax Credit (EITC)?
Yes. Contributions to your FSA will reduce your earned income for purposes of the Federal EITC. This means that participation in the FSA may affect your EITC.
How do I determine if participating in the FSA would affect my social security benefits?
Participation in the FSA may have a minimal effect on your social security benefits upon retirement. The Social Security Administration (SSA) uses the highest 35 years of salary earned before retirement to calculate your social security benefit. However, if you are concerned, you should call the SSA for further advice at 1-800-772-1213 or visit www.ssa.gov.
What happens if I submit a claim for an amount greater than my FSA balance?
When you submit an eligible claim to the HCSA, you will be reimbursed up to the full amount of your annual election, regardless of the amount of money that has been deposited into your account. Contributions will continue through payroll deductions throughout the year and claims will continue to be paid until your elected annual contribution amount is met.
Dependent care and adoption claims are paid differently. If you submit a claim and your balance is less than the amount of the claim, you will only be reimbursed for the amount of money available in your account. The remainder will be reimbursed once the money is deposited into your account. This enables you to submit a claim only once and receive reimbursement on an ongoing basis until it is paid in full.
What if I don’t use up all my money by the end of the year?
You will forfeit the money that remains in your account. You will have until March 31, 2021 to submit claims for expenses you incurred during the 2020 plan year. You should plan very carefully when estimating your expenses, and check your quarterly statements for balance information. The State uses forfeitures to offset the costs of administering the program.
What if I change my mind?
You may not change your mind once the plan year begins, but you can decide not to join next year. There are certain situations, called “changes in status,” and if they occur in your family during the plan year, you can make a change—you can start, stop, restart, or change your deduction amounts as long as the requested change is consistent with your qualifying event. The change in status application process is paperless. You may file a change in status application online or by calling the FSA administrator at 1-800-358-7202.
If I underestimate or overestimate my elections, can I transfer money between my FSA accounts?
No, you can use monies only for the purpose for which the election was initially made. IRS Regulations do not allow monies to be transferred or commingled between accounts.
How long is my contribution in effect?
Your contribution is in effect until the end of the plan year. Each year you will have the opportunity to re-enroll and select a new annual contribution amount.
How can I correct an error if I enroll in the wrong FSA benefit?
In late November, you will receive a confirmation notice of your elections and can make any necessary
changes at that time. Changes to confirmation notices must be done in writing on the confirmation notice itself by the deadline stated in the letter. It is your responsibility to ensure that your address is correct and that your notice is received by the deadline. Once the confirmation notice deadline has passed, you cannot change your election unless you have a valid change in status event. IRS regulations do not allow monies to be transferred between accounts under any circumstances.
Important Dates to Remember
Open enrollment period is October 7 through November 8, 2019 at 10:00 p.m. ET.
If you are enrolled for the 2019 plan year, you must re-enroll to continue your benefits in 2020.
The 2020 plan year runs from January 1 through December 31, 2020.
New state employees hired during the open enrollment period who are unable to enroll by the November 8 deadline because they have not been assigned a NYS EMPLID may enroll for the 2020 plan year by submitting a 2020 change in status (CIS) application within 60 days of their hire date. The 2020 change in status system will be available beginning on November 9, 2019.
|October 7, 2019||
2020 Open enrollment period begins
New state employees hired during the open enrollment period who have not been assigned a
NYS EMPLID may enroll by submitting a 2020 change in status application within 60 days of their hire date.
Last day to submit change in status applications for 2019 plan year
|Last day to submit requests for adjustments for 2019 plan year|
|November 8||Open enrollment period ends at 10:00 p.m. ET|
|November 9||First day to submit change in status applications for 2020 plan year|
|November 25||Confirmation notices sent to all applicants|
|December 9||Deadline for WageWorks to receive written confirmation notice corrections from applicants|
|January 8, 2020||First deduction taken from Administration Payroll participants|
|January 16||First deduction taken from Institution Payroll participants|
|January 31||Deadline for correcting administrative errors resulting from open enrollment process|
|March 31||Deadline for submitting claims for 2019 plan year|