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About Reimbursement Accounts
Health Care Reimbursement Account (HCRA)
Dependent Care Reimbursement Account (DCRA)
Reimbursement Accounts provide you with a way to pay for certain health care and
dependent care expenses on a pre-tax basis. Contributions to these accounts are exempt
from federal and social security taxes, while exemption from state taxes varies by
each state you should consult your tax advisor to determine if any part of your pre-tax
contribution(s) is taxable for state purposes. Once you elect your annual contribution(s),
money is deducted on a pre-tax basis in equal installments from your paychecks during
the year. The money is set aside in an account for you and is used to reimburse you
only for eligible expenses that you incur during the calendar year; you are not taxed
on these reimbursement(s).
Enrolling for Reimbursement Accounts
Upon your initial eligibility date or during Open Enrollment each year, you must decide if you want to participate in the Health Care Reimbursement Account (HCRA) and/or Dependent Care Reimbursement Account (DCRA) as well as how much you want to contribute to each account.
To participate in the Health Care and/or Dependent Care Reimbursement Accounts, you must make an election either when you first become eligible or during open enrollment each autumn; Reimbursement Account elections for the current year will NOT carry over to the following year. If you do not enroll during the Open Enrollment period, you will have to wait until the next Open Enrollment period to participate UNLESS you experience a qualifying change in family status that would allow you to elect to participate. Because there are few changes that would allow you to participate in the middle of the year, please assess your needs to determine if you want to contribute to the HCRA and/or DCRA plans before the end of the enrollment period.
Eligible Expenses
Expenses eligible under the Reimbursement Accounts are determined by the IRS; please refer to the Health Care Reimbursement Account (HCRA) and/or Dependent Care Reimbursement Account (DCRA) sections for details.
Eligible expenses must be incurred between January 1 and December 31.* It is essential that your contributions to the Reimbursement Account(s) be as close as possible to your anticipated expenses for year since IRS regulations require that any unclaimed balance in your HCRA and/or DCRA account(s) at the end of the plan year be forfeited. Plan participants have until June 30th of the following year to submit claims for expenses incurred during the current plan year.
* If you enrolled in HCRA and/or DCRA after January 1, remember that you can only receive reimbursement for eligible expenses incurred AFTER your eligibility date. Your completed claim forms along with any supporting documentation must be submitted to UnitedHealthcare by June 30 of the following year.
To access a claim form for Health Care or Dependent Care expenses, please click
here.You will be required to log-in to access the proper form for your institution.
The Health Care Reimbursement Account is subject to the special IRS rules, including definitions of eligible and ineligible expenses under the plan. It is important that you understand the plan before you enroll.
You may contribute annually between $240 and $5,000 in pre-tax dollars to HCRA. Eligible expenses can be for yourself, your spouse, or other family members (even if they are not covered under your health insurance plans) as long as you claim them as dependents on your tax return. This account may be used to cover health expenses that are not eligible for reimbursement under any health insurance plan in which you are covered, such as:
Eligible Expenses
- Medical, dental, and drug expenses not covered under your health insurance. This includes the deductibles, co-payments, co-insurance (the percentage of charges not paid by an insurance carrier), and medical and dental expenses over reasonable and customary limits or plan maximums or private hospital rooms.
- Vision expenses not covered under any insurance plan, including prescription glasses and contact lenses
- Hearing aids and examinations
- Certain over-the-counter medications, including allergy medications, pain relievers, and antacids
- Other types of health care expenses that you could claim as federal income tax deductions. The IRS limits the amount that you can claim on your tax return, but these limits do not apply to a reimbursement account.
Ineligible Expenses
- Cosmetic Surgery
- Electrolysis
- Most non-prescription medication (please see "Eligible Expenses" for exceptions)
- Weight loss program that are not medically necessary
- Health expenses incurred by your domestic partner and your partner's dependent child(ren)
- Health insurance premiums
- Health club dues
For a complete list of eligible and ineligible expenses under HCRA, please visit the Internal Revenue Service website at www.irs.gov and refer to Publication 502.
The Dependent Care Reimbursement Account is also subject to the special IRS rules, including definitions of eligible and ineligible expenses under the plan. It is important that you understand the plan before you enroll.
You may contribute up to $5,000 annually in pre-tax dollars to DCRA per household. There is no annual minimum as required with HCRA. Dependents for whom you may claim dependent care expenses include:
- Children under age 13 whom you claim as deductions on your federal income tax return are considered eligible dependents.
- Other dependents, such as a disabled spouse or parent, are considered eligible ONLY if they require full-time care because of physical or mental disability and are claimed as dependents on your federal income tax return.
- A person other than your spouse must rely on you for more than one-half of his or her support to qualify as a dependent.
You are eligible to participate if you are:
- A single head of household
- Paying for dependent care in order to work
- Married - both you and your spouse must be "gainfully" employed or a full-time student to qualify for this benefit.
Additional factors which may affect your decision to participate in DCRA include:
- If you are married and filing separate tax returns, your maximum limit is $2,500
- If you are married and your spouse has elected an amount under his/her plan at work, your maximum limit is reduced by that amount.
- The maximum amount you may elect is limited to your earned income for the calendar year if you earn less than $5,000 after all reductions in compensation (including the reduction related to dependent care assistance).
- The total amount you elect for your dependent care account cannot be greater
than your working spouse's annual income.
- Due to IRS requirements, highly compensated employees earning more than $95,000 a year will be limited to a lower contribution amount (for School employees: $3,725; for Hospitals Center and HJD employees: $1,435) annually per household, with the possibility of further adjustment. Those affected may be able to contribute more through a spouse's plan, and should check with a tax advisor to be sure.
Eligible Expenses
- After school programs, preschool tuition (below first grade), summer day camp (but not overnight camp), and daycare centers.
- Child care provided outside or in your home by someone other than another dependent who is at least 18 years of age.
- Housekeeping expenses, but only the amount directly related to caring for a dependent.
- Care provided outside the home for a dependent other than a child as long as the dependent spends at least eight hours a day in your home.
- Senior Centers.
Note: The IRS requires you to furnish the tax ID number, name and address of any dependent care provider. Although the IRS allows a tax credit on dependent care expenses, the credit does not apply to expenses paid through a reimbursement account. Generally, if you earn more than $24,000, the reimbursement account should save you more than the tax credit, but you may need to seek professional tax advice before deciding which approach is better for you.
Ineligible Expenses
- Babysitting during non-working hours
- Payments to a child under age 19 or any individual you claim as a dependent
- Cost of food, clothing and/or transportation between your home and a dependent care facility
- Overnight camps
For a complete list of eligible and ineligible expenses under DCRA, visit the Internal Revenue Service website at www.irs.gov and refer to Publication 503.
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