Introduction to Health Savings Accounts (HSA's)
As the name suggests, a Health Savings Account (HSA) is a special savings account set up by the employee for healthcare expenses. It is a tax-advantaged personal savings or investment account that individuals can use to save and pay for qualified health expenses, now or in the future. Paired with a qualified high deductible health plan (HDHP), an HSA is a powerful financial tool that empowers consumers to be more actively involved in their health care decisions.
However, unlike other financial savings vehicles (Roth IRA, Traditional IRA, 403(b), 401(k), etc.), an HSA has the unique potential to offer triple tax savings through:
Contributions can be made by the employer, the employee/individual, or both. Tax-free withdrawals can be made to pay for qualified medical expenses incurred by the accountholder, spouse, children and other dependents.
HSA's are also portable, which means that individuals keep their HSAs if changing jobs or becoming unemployed. Also, since the account is owned by the individual, there is no "use-it-or-lose-it" provision, like with a Flexible Spending Account (FSA). Instead, unused contributions roll over each year, with interest and/or investment earnings compounding on a tax-free basis, like an IRA or 401(k). HSA's offer the postential for long-term, tax-free savings that can be used for future medical expenses, such as Medicare premiums and certain long-term care expenses and insurance.
Any adult who is not already enrolled in Medicare and is covered by an HDHP (and has no other first dollar coverage except for preventive care) may establish an HSA. There are no income limitations.
Some HSA Uses:
The IRS prohibits an employee from participating in both an HSA and a Flex Benefits: medical (also called a Flexible Spending Account (FSA)) plan.
If you have questions about HSA's or Flexible Benefits contact Michelle Weber in Business Affairs at 553-2431.
Introduction to Flexible Spending Accounts (FSA's)
Flexible Spending Accounts (FSA's), sometimes referred to as Flexible Benefit Plans or IRS Section 125 Cafeteria Plans, provide innovative ways for employees to save tax dollars. It is a voluntary plan that gives employees the opportunity to pay for many qualifying expenses with tax free dollars. Participating in a flex plan allows each employee to choose the benefits that best fit his or her needs.
What are the options?
Employees may participate in as many of the following options as they deem fits their needs:
Employess can pay their portion of any insurance premium on a pre-tax basis. The Cedar Falls Community School District automatically deducts the employee premium from salary before taxes, reducing taxable income while increasing the employee's take-home pay. Employees may waive this benefit.
*Unreimbursed Medical Expenses
A variety of medical, dental, and vision expenses that are not covered by insurance are considered qualifying expenses. See the list of eligible medical expenses in the link below.
*Dependent Care Expenses
Day care paid while you and your spouse work can be paid with tax-free dollars. The cost of care for children or disabled or elderly dependents are included in this category.
How are FSA's administered?
The Cedar Falls Community School District has engaged Midwest Group Benefits, based in Decorah, Iowa, to be the plan administrators. They activiate enrollments, process claims, answer employee questions and provide guidance. They also maintain a helpful website http://www.mgbtpa.com.
Ready to get started?
Your employer has already done the necessary work to allow you to take advantage of this opportunity. You need to:
1. Estimate the annual amount of unreimbursed medical and dependent care expenses you and your family will spend.
2. Complete the election form.
3. Turn in reimbursement claim forms as you incur these expenses.
4. Receive your reimbursement check.
There are several "rules" the IRS has implemented for Section 125 participants that you should be aware of:
Plan Year. Only expenses incurred during the plan year are reimbursable (though payment of these expenses can be carried over for a short time.)
Separate Accounts. Unreimbursed medical expenses and dependent care expenses are treated as separate accounts. The IRS does not allow you to transfer money between those accounts.
Family Staus Changes. Once you make your decisions on how much you redirect into your spending accounts, this cannot change ... except for changes in your family status which include: marriage, divorce, death of a spouse or child, birth or adoption of a child, or change in your spouse's employment status from full-time to part-time or vice versa.
Forfeiture of Unused Balance - "Use It or Lose It". If expenses you incur for the Plan Year (including the grace period, if applicable) are less than your contributions for the same Plan Year, you will forfeit the unused balance. With wise and conservative planning most participants do not forfeit any money.
In the document titled "Reimbursement Procedure" (see link at end of this section), Midwest Group Benefits has outlined their process for submitting flex claims. Note that they process claims daily, and pay the claims once a week on Wednesdays. They ask that if you wish to have a claim processed that week, your claim should reach their office by noon Tuesday. Reimbursements will be directly deposited into your checking or savings account. They have found that most participants are receiving their reimbursements by Friday. To obtain the details of your reimbursement you will need to go online to http://www.myflexonline.com/.
Cedar Falls Schools requires your reimbursements to be direct deposited to your checking or savings account (please complete the Direct Deposit Form). You will also have the option of having a flex debit card. The cost will be $12.00 for the Plan Year, which will be directly debited from your spending account. Please see the "Debit Card Memo" at the end of this section for details.
Once you are enrolled in the plan you will have online access to your account via www.myflexonline.com. This site not only features the ability to check your account balances but also has a generic claim form that can be downloaded. A new feature of myflexonline.com is internet claims entry (ICE). The ICE form will allow you to enter your claim information online. Simply click on the drop down menu to "file a claim." Upon completion, print the document and submit the claim form with your substantiation.
You are encouraged to go to the Midwest Group Benefits website, http://www.mgbtpa.com/. There is also a claim form in a .pdf format that can be downloaded and calculators to help you determine how much to elect for the upcoming plan year.
Phone - 800-344-3766 or 563-382-9611
Fax - 563-382-9613 (Claims may be faxed to this number)
Address - PO Box 408 - Decorah IA 52101