Flexible Spending Accounts (also called Reimbursement Accounts) provide a way for employees to set money aside, on a pre-tax basis, for: 1. medical expenses for the employee and dependents which are not covered by insurance, and 2. dependent care expenses.
The annual set aside for a medical expense reimbursement account is $1,800. Employees may also have up to $5,000 deducted annually for a dependent care account.
NOTE: $48 per year (or $4 per month) will be deducted from the employee’s account to cover administrative fees. If enrolled in both a medical care and a dependent care reimbursement account, the administrative fee is deducted from the dependent care account.
Some common medical expenses not covered by insurance include: insurance deductibles, co-pays, and co-insurance; eye exams not covered by insurance; eye glasses and contacts (including lens solution, etc.); dental care not covered by insurance; orthodontia; routine physicals not covered by insurance; hearing aids and batteries; contraceptives; and certain psychological therapy and substance abuse programs not covered by insurance (prescribed by a physician).
In general, expenses that are prescribed by a physician for treatment of an illness or injury are likely to be eligible for reimbursement. Expenses for general health improvement or maintenance are not eligible. Cosmetic treatments are not eligible.
Dependent Care Accounts can be used for day care expenses for children through kindergarten. For kindergarten through age 12, the dependent care account can be used for before and after school programs, vacation programs, and most day camps. The Dependent Care Account can also be used for non-overnight care of any dependent 13 or older, who is not capable of self care, such as an adult child or spouse who has a disability.
Enrollment for Medical and Dependent Care Reimbursement Accounts is not open continuously. Open enrollment occurs annually, generally in the fall, for the next calendar year. Announcements for open enrollment originate with the Division of Employee Health & Benefits, Department of Administrative and Financial Services.
Careful planning is essential to participation in pre-tax Flexible Spending and Dependent Care Accounts. It is very important to note that IRS regulations require that any money that is set aside in a pre-tax Flexible Spending and/or Dependent Care Account that is not used in the calendar year that it is set aside, is forfeited.
Changes may be initiated under certain limited circumstances. Employees may increase, decrease, or cease deductions upon marriage or divorce; the birth or adoption of a child; the death of a spouse or child; changes in employment status of the employee or the employee’s spouse (from full-time to part-time or vice versa); leave of absence; termination of employment; significant change in the cost, or coverage, of health insurance not chosen by the employee or the employee’s spouse, and attributable to employment. The change must be consistent with the event. For example, it is not allowable to reduce the dependent care expense contribution due to the birth of a child, unless the employee or the employee’s spouse takes a leave of absence to care for the child and, hence, would not incur day care expenses during the leave.
Questions should be directed to The Maine Choice at 800-634-9911, or the Division of Employee Health and Benefits at 287-6780/800-422-4503 (TTY 888-577-6690).