Spending Accounts Health Care & Dependent Care SHPS

Spending Accounts

Health Care & Dependent Care

SHPS

February 2010 2APRIL 2010

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



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



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



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 NOTENOTE: 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

Spending Accounts Health Care & Dependent Care SHPS

Documents

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