Healthcare Flexible Spending Account

Less taxes = more money

image hfsa

Health Flexible Spending Account (HFSA)

The Healthcare Flexible Spending Account (HFSA) allows you to stretch your budget further. The HFSA is a voluntary pretax benefit plan that allows you to set aside money from your paycheck to be used to pay the out-of-pocket medical, prescription, dental and vision expenses that you and your dependents incur.

You never pay taxes on the money you put into your account, giving you more bang for your buck when you use pretax money to reimburse qualified healthcare expenses.

How does it work?

With the HFSA, you’ll receive a WageWorks Healthcare Card. You use the card like a debit card – just swipe and go. Also, your total election is available May 1, so the card can help regulate your healthcare spending and take care of those unexpected expenses along the way.

Use your card at your doctor’s office, pharmacy and more to pay for qualified expenses for instant reimbursement.

Employees minimum annual election amount is $240 and the maximum is $2,550. If you choose not to re-enroll for the next plan year, the carryover amount minimum is $50 and the maximum is $500. The minimum amount does not apply if re-enrolling. Carryover amounts can only be carried over one plan year without re-enrollment.

Examples of qualified expenses include:

  • Copayments, coinsurance and deductibles for medical, vision and dental services
  • Chiropractor
  • Eyeglasses, reading glasses, contact lenses and contact lens solution
  • LASIK
  • Bandages and related items
  • First aid kits
  • Hearing aids and batteries
  • Medical equipment
  • Lab fees and diagnostic services
  • Hospital services and fees

How do I manage my HFSA?

Management of your HFSA is a snap with the WageWorks Web portal or mobile app. You can set up alerts, view your dashboard, submit a claim or receipt, and more.

HFSA - Eligible Expenses

Visit the WageWorks website for a searchable table of eligible expenses.

Some examples of eligible expenses include:

  • Acupuncture
  • Air conditioners *
  • Ambulance expenses
  • Automobile equipment to assist the physically disabled
  • Birth control pills
  • Braille books and magazines
  • Child birth preparation classes, for the mother only
  • Chiropractic
  • Contact lenses and solutions
  • Copayments under your insurance plan
  • Coinsurance
  • Cost of a note-taker for a hearing impaired child in school
  • Crutches
  • Deductibles for medical, dental, and vision plans
  • Dental cleanings and fillings
  • Detoxification or drug abuse centers
  • Diabetic supplies
  • Diagnostic tests and health screenings
  • Drug addiction/alcoholism treatment
  • Expenses in excess of medical, dental, or vision plan limits
  • Expenses for services connected with donating an organ
  • Eye exams
  • Eyeglasses
  • Guide or guide dogs and associated expenses for persons who are visually or hearing impaired
  • Hearing aids
  • Household visual alert system for hearing impaired persons
  • Injections and vaccinations
  • In vitro fertilization
  • Laser eye surgery
  • Massage therapy
  • Medically necessary mattresses and boards*
  • Mileage to/from medical providers
  • Nicotine patches and gum
  • Orthodontia**
  • Orthopedic shoes
  • Physical therapy
  • Postage/handling fees
  • Prescription drugs
  • Psychotherapy
  • Radiation treatments
  • Remedial reading *
  • Respirators
  • Routine physical exams
  • Smoking cessation programs
  • Specialized equipment for disabled persons
  • Special devices, such as a tape recorder and typewriter, for people who are visually impaired
  • Speech therapy
  • Sterilization surgery
  • Transportation expenses related to medical care
  • Water fluoridation devices *
  • Weight reduction program for physician-diagnosed obesity or other medical condition*
  • Well-baby and well-child care office visits
  • Wheelchairs
  • Whirlpool*
  • Wigs for hair loss due to any disease*
  • X-rays

Ineligible expenses

  • Clip-on sunglasses
  • Cosmetic expenses, including drugs – both prescription and over-the-counter – used for cosmetic purposes
  • Expenses claimed on your income-tax return
  • Expenses not eligible to be claimed as an income-tax deduction
  • Expenses reimbursed by other sources, such as insurance companies
  • Fees for exercise/athletic/health clubs where there is no specific medical reason for membership
  • Hair transplants
  • Illegal treatments, operations or drugs
  • Insurance premiums
  • Long-term-care expenses
  • Marriage counseling
  • Sundry items – soap, toothpaste, deodorant
  • Teeth bleaching
  • Varicose/spider-vein treatment
  • Veneers
  • Warranties
  • Weight-reduction programs for general well being

* Expenses noted by asterisk must be accompanied by a letter of medical necessity from your medical provider that indicates the medical disorder, the specific treatment needed, and how this treatment will cure, mitigate, treat or prevent a specific medical condition. In some cases, additional documentation may also be required to validate the expense for reimbursement. Additionally, items claimed for the home, such as air conditioning units, must have certification from a “knowledgeable person” stating that the purchase did not increase the value of the residence; or only the difference of the charge and the increase in the home’s value may be claimed (i.e. if an air conditioning unit costs you $1,000 and a knowledgeable person states that it increases the value of your home by $300, you may only be reimbursed the $700 difference.)

**Orthodontic expenses are reimbursed according to the prorated monthly fee. The plan administrator can reimburse the initial down payment amount and then must break down the remainder of the charges according to the monthly fee assessed. In order to receive reimbursement for orthodontic work, a copy of the original contract must be submitted to the plan administrator showing the total dollar amount the participant is responsible for, less any down payment amount as well as the estimated length of time the treatment will last. For example, if the total participant responsibility for orthodontic work is $2,000, the initial down payment amount is $500 and the expected treatment time is 15 months, the plan administrator can reimburse the $500 initially and then $100 per month thereafter. Per IRS regulations, the plan administrator is required to see that the down payment and monthly payment(s) have been paid in order to issue the reimbursements. Please remember that even if you pay for the entire amount of the orthodontic work up front, the expenses will be reimbursed only on a monthly basis.

HFSA - Things to consider

How much can I put in my HFSA?

If you decide to participate in the HFSA, you may contribute from $240 to $2,550 per year. During open enrollment, you will estimate next year’s medical expenses and elect the amount you wish to put into in the HFSA.

If you decide to put $240 into your HFSA, $10 will be deducted from your paycheck for 24 paychecks from May through April. A $500 annual contribution is $20.83 from each paycheck.

Reimbursement of eligible expenses: You may incur expenses and request reimbursement from your HFSA as early as May 1. You can be reimbursed up to the entire annual election, even if the entire amount has not been deducted from your paycheck.

Changing your election

After the annual open enrollment, you can only change your HFSA election during the plan year if you have a change in family status. Events such as marriage, divorce, legal separation, or birth of a child allow you to increase your annual contribution, but only up to a maximum of $2,550. You may not reduce or stop contributing during the plan year.

Use it or lose it

It’s important that you carefully calculate the amount you put into the HFSA. Up to $500 will rollover automatically in the next plan year. Any amount over $500 emaining in your HFSA account at the end of the plan will not be returned to you. You will forfeit the amount over $500. 

Don’t let these rules scare you away from this important benefit, especially if you or your family will have unreimbursed health-care expenses in the next 12 months. Don’t let the federal government take more than its fair share of your hard-earned dollars!

How much should I contribute?

How much did you pay in copayments this year for doctor and dental visits? For prescriptions? Plan to get a new pair of glasses this year? Are you expecting to go to the hospital early next year? What’s the mileage to and from your doctor? Use these questions to estimate your expenses for next year. View the calculation worksheet.

To estimate how much you should contribute to your HFSA, add up the anticipated costs for routine medical and dental checkups and for major expenses, such as braces, for you and your family that will not be reimbursed by any other insurance plan. Estimate what you will spend May through April. Any expense the IRS considers deductible and that is not reimbursed through a health plan is eligible for reimbursement from your HFSA.

Some of the most common reimbursable expenses are deductibles, copayments, contact lenses, glasses, hearing aids, and prescription-drug copayments.

Expenses not recognized by the IRS, and not reimbursable, include cosmetic surgery and health-club dues for general health purposes.

This is the right answer for me!

Enrollment is voluntary and is as easy as completing an enrollment form available online during the open enrollment period through the Employee Self Service portal at portal.houstontx.gov.

You can only enroll in this benefit during open enrollment, and your election is valid for the upcoming plan year only. You will have to enroll every year during the annual open-enrollment period.

Employees who begin work after May 1 can enroll during the first 90 days of employment. Coverage is effective on the 1st or 16th of the month after 90 days of employment. Your enrollment is valid for the rest of that plan year.

Is it easy to file a claim?

It’s as easy as sending a fax. And now it's even easier with the WageWorks card. With the WageWorks card you canccess your HFSA funds so you don't have to use your out-of-pocket dollars.

The WageWorks card will be accepted at the following health care providers:

  • Doctor's office
  • Pharmacy
  • Dental provider
  • Vision care provider
  • Hospital

To file a claim for reimbursement from your account, obtain the Healthcare Flexible Spending Account claim form from the benefits division or online at www.aflac.com/us/en/docs/benefits/flexclaim.pdf and complete it. Provide the required documentation for your eligible health-care expense.

Most official reciepts from your doctor's office will work. They must show the following:

  • The name of the service provider
  • A description of the service or a list of the supplies furnished
  • The charge(s) for each service
  • The date(s) of service
  • The name of the person(s) receiving the service

Fax your completed form and receipts to 877-353-9256, or mail them the address below:

WageWorks
1932 Wynnton Road
Columbus, GA 31999-9950

Claims are paid every Tuesday, barring a holiday.

You can expect to receive your reimbursement check within 10 days after the Tuesday processing schedule. Most claims are paid and mailed within seven days. You can receive faster payments if you sign up for direct deposit. Or, get instant reimbursement by using your Aflac Now card to pay for your eligible expenses.

Changes in family status

Because the plan allows you to reduce your taxable income, the IRS has some rules about making changes to your HFSA account outside of open enrollment.

During a plan year, you can increase your contribution amount only if you experience a change in family status. Changes in family status, as defined by the IRS, include the following:

  • Marriage or divorce
  • Gaining or losing a dependent
  • Termination or commencement of your spouse’s employment
  • A change in job status from full-time to part-time or vice versa for you or your spouse

A child turning age 18 is not a change in family status.

If you have a change in family status, log on to ESS at portal.houstontx.gov and update your dependents status. Submit relationship documetns to Benefits at 611 Walker, 4th floor. The change must be consistent with the change in your family status. You may not reduce or stop contributing during the plan year.

Any change you make will apply for the rest of the plan year, unless you have another change in family status.

HFSA - FAQs

What are the benefits of participating in the HFSA?

You are in control. You make the decision to participate how much to contribute to your HFSA account, up to $2,550 per year.

Saves you money. Contributions to the plan are deducted from your paycheck before taxes. That means you will not pay taxes on the amount of money you deposit into your HFSA. That lowers your taxable income.

Manage your money. Now you can have money that has been set up to pay for health-care expenses that are not paid by your insurance plans. This helps you better manage your money and budget.

Tax-free withdrawals. Withdrawals are tax free if you use the money to pay qualified medical expenses.

Interest-free loans. You can withdraw funds from the account to pay qualified medical expenses even if you have not yet placed the funds in the account. When you use the plan this way, it’s like getting an interest-free loan for your out-of-pocket health-care expenses.

 


 

What’s in it for the city?

There are tax advantages for you to participate, and there are tax advantages for the city. You win by reducing your taxable income. The city benefits by reducing the amount of FICA tax it contributes on your behalf. We’re both SMART.


 

Can I put money in this plan for my spouse and dependent children’s out-of-pocket health-care expenses?

Yes. You may request reimbursement for your own eligible expenses as well as your spouse’s, if you file a joint tax return. Expenses for a dependent child are eligible for reimbursement if you claim the dependent on your federal income-tax return, the dependent lives with you, and you provide more than half of the dependent’s support. You or your dependents do not need to be covered by the city’s medical or dental plans to participate in the HFSA.


 

What if I change my mind during the year?

You will have to decide how much to contribute to this plan during open enrollment. Once you make your election for the year, you cannot increase or decrease your contribution until open enrollment next year. The only exception to this rule is if you have a family-status change.

 


 

Do I have to wait until my contribution is deducted from my paycheck before I can file a claim for reimbursement?

No. You can incur or file a claim for reimbursement up to the total amount you have elected for the year at any time after the beginning of the plan year, even if the money is not yet in your account. This is one of the best benefits of the HFSA.


 

What happens if I have money left over at the end of the year?

Up to $500 will be automatically rolledover into the next plan year. Anything over $500 will be forfieted.


 

What if I overestimated my expenses and can’t get to my dentist before April 30?

If you find that you have overestimated your health-care expenses for the year, there are many ways to use the money in your account before the plan year ends April 30. Remember, vision expenses such as an extra pair of glasses or contact lenses, are eligible expenses. So, it is rare that anyone leaves money in the account. Also, you can rollover $500 into the next plan year. This is an automatic process, there are no forms to fill out. But anything left in your account over $500 will be forfieted. If you choose not to re-enroll for the next plan year, the carryover amount minimum is $50 and the maximum is $500. The minimum amount does not apply if re-enrolling. Carryover amounts can only be carried over one plan year without re-enrollment.

 


 

Does the rollover amount affect how much I can elect for the plan year?

No. You can still elect to put the maximum of $2,550 into your account even if you rollover any from the previous plan year. For example, you have $500 leftover and it rolls over into the new plan year. Then you elect to put $2,550 in your account for the plan year - your total account about would be $3,050.


 

What is the difference between the Healthcare Flexible Spending Account and the Dependent Care Reimbursement Plan?

At first glance, the Healthcare Flexible Spending Account and the Dependent Care Reimbursement Plan look similar. Both save you money in taxes; both are flexible spending accounts as defined by the IRS; and both are administered by WageWorks.

However, these two benefits are separate plans, designed for two different purposes. The HFSA is a pretax account for health-care expenses incurred by you and your family. The Dependent Care Reimbursement Plan is a pretax account for dependent daycare expenses. The DCRP will not reimburse you for health-care expenses, even if they are for your dependents.


 

Can I transfer money from my Dependent Care Reimbursement Plan to the HFSA?

No. While there are many similarities between the HFSA and the Dependent Care Reimbursement Plan, they are separate plans, and money cannot be transferred from one to the other, even if you made a mistake by electing the wrong plan. So, please be careful when enrolling in these reimbursement programs. Be sure that you are enrolling in the intended benefit plan.


 

If I terminate employment during the plan year before April 30, may I continue to participate?

Participation after termination requires election of COBRA continuation coverage. COBRA also applies to dependents losing eligibility as a result of a family-status change.


 

Will my pension benefit be affected by my participation in the HFSA?

No. Your city pension is calculated on your “base pay” prior to the HFSA deduction. Your retirement benefit from Social Security is calculated on your taxable earnings, meaning the lower amount.


 

What if I leave my job with the city? Can I get the balance left in my account?

Yes, if you have incurred eligible expenses and claim them in the proper time period. Your HFSA benefit ends on your last day of employment with the city. You will only be able to make claims on expenses that you have incurred prior to your last day of employment. Your deductions stop with your last paycheck unless you elect COBRA.


 

When do I have to file a claim?

Claims must be filed within 90 days of plan-year end, unless you cease to participate before April 30. In that case, you must file your claim within 90 days after your participation ends. All claims must be incurred while you are a participant.


 

Will WageWorks reimburse me for every claim I submit?

Reimbursement is based on your annual election, amount previously reimbursed, proper documentation, and eligibility of the expense. If your claim is denied, WageWorks will provide a specific reason in writing.