Flexible Spending Accounts
Healthcare and Dependent Care Reimbursement Accounts: Section 125 Flex Spending Accounts
This plan allows you to contribute pre-tax payroll deductions to accounts that you can use to reimburse yourself for certain healthcare and dependent care expenses. You may elect to participate in either or both of these programs.
How It Works
You elect to have pre-tax money deducted from your pay. These deductions are deposited into your flexible spending account(s) (FSAs) and are available to reimburse you for eligible healthcare and dependent care expenses that you already have paid. If you choose to participate in both medical and dependent care accounts, your deductions will be kept separate from each other since your medical account may not be used to pay for dependent care expenses and vice versa. Funds deposited to your account may be used only to reimburse you for eligible expenses that you have paid. Funds may not be withdrawn from your account for other reasons, even in the event of financial hardship.
You will forfeit funds left over in your account(s) that you have not used to reimburse yourself by the annual reimbursement deadline (June 30). Therefore, you may want to limit the amount of your contributions to the amount of your predictable, eligible expenses. Any money you forfeit due to this use-it-or-lose-it feature is used to offset to administrative expense associated with managing the plans.
Effect on Taxes and Other Benefits
Generally, amounts you contribute will decrease the amount of federal, state, and Social Security tax withholdings from your pay. Since your contributions are not subject to the Social Security tax, they can result in minimal decreases in your Social Security benefits. Amounts you contribute will not affect your salary for purposes of salary reviews, the defined benefit pension plan, 403(b) contributions, life insurance coverage, or disability benefits.
Special note regarding dependent care accounts: Using the dependent care reimbursement account program may limit or eliminate the availability of the federal childcare tax credit on your annual tax return. Consult with your tax advisor for more information.
Healthcare reimbursement accounts come with a $2,500 limit per plan year. This limit is subject to change in the future.
Dependent care accounts come with a $5,000 limit per plan year. Per federal tax law, a lower limit may apply if you are married. Consult with your tax advisor for more information.
For these programs, the plan year runs from January 1 through December 31.
When Contributions Start
When you are first hired, you may start contributing as of the first of the month following your hire date. You must make this election within 30 days of your hire date. Otherwise, you are limited to starting contributions as of January 1. You make your election during the annual benefits open enrollment period. Exceptions to the limited annual enrollment period may be available if you experience a qualifying life event (see Qualifying Life Event section below for more information).
When Contributions Stop
Your pre-tax contributions to your account(s) stop at the end of the plan year (December 31) or when your employment ends, whichever is earlier.
Annual Reenrollment Required and Open Enrollment
Since your pre-tax contributions stop at the end of the plan year, you must actively reenroll during the annual benefits open enrollment period if you wish to participate in the flexible spending plan during the coming year.
Your election to make pre-tax contributions to your account(s) is irrevocable for the duration of the plan year. Therefore, you may not stop or change the amount of your pre-tax contributions once the plan year has begun. Exceptions to this rule may be available if you experience a Qualifying Life Event (see Qualifying Life Event section below for more information). Also, funds deposited to your account may be used only to reimburse you for eligible expenses that you have paid. Funds may not be withdrawn from your account for other reasons, even in the event of financial hardship.
Eligible Expenses and Healthcare Reimbursement Accounts
In most cases, you may be reimbursed for out-of-pocket healthcare expenses that you and your family members incur if those expenses are not covered by health or dental insurance. In addition, to be eligible for reimbursement, these expenses cannot be reimbursed by any other source and cannot be deducted on your income tax return. Examples of common, eligible expenses include co-payments, deductibles, coinsurance required by health or dental insurance, products and services not covered by health insurance, and over-the-counter drugs such as contact lens fluid, cold medicines, and pain relievers prescribed by your doctor or healthcare provider. See the Crosby Benefits website for more examples of common, eligible expenses.
Eligible Expenses and Dependent Care Reimbursement Account
Your dependent is anyone you claim as a dependent on your tax return and who is under age 13 or disabled and incapable of self-care. Examples of dependent care reimbursable expenses include adult day care, day care, summer day camp, day care provided in your home, and before- or after-school care. Generally, you may be reimbursed for expenses you incur for the care of your "dependent" if those expenses occur in order for you or your spouse to go to work or to look for work. Dependent care provided by certain of your family members may not be eligible for reimbursement.
How Reimbursement Works
Crosby Benefits, Inc. administers the reimbursement process for this program on behalf of the college.
Healthcare Reimbursement Account
You will receive a flexible spending debit card (flex debit card) for use with your account. Use your flex debit card to pay for eligible expenses at many doctors' offices, pharmacies, and other healthcare providers. Be sure to keep receipts for your purchases since IRS regulations may require you to substantiate your expenses. At any time during the plan year, your available flex debit card balance is your total, annual FSA election minus previous purchases (or reimbursements).
Dependent Care Reimbursement Account
For dependent care reimbursements, send your request for reimbursement to Crosby Benefits, Inc. either electronically or on paper. The paper claim forms are available on the Crosby Benefits website. Both methods (electronic or paper-based) require that you provide proof of your paid expense(s). Provide the name and tax ID number of the care provider as well as dates of service and costs of service. Contact Crosby Benefits, Inc. (1-800-462-2235 or via the Crosby Benefits website) for instructions on and assistance with submitting your reimbursement request electronically and/or on receiving your reimbursement via direct deposit.
You will be reimbursed only for eligible expenses you incur during the plan year (January 1 through December 31). The deadline for requesting reimbursement for a plan year is the March 31 immediately following the plan year (example: March 31, 2014 is the deadline for requesting reimbursement for expenses incurred between January 1, 2013 and December 31, 2013).
Qualifying Life Events for Changing Your Contributions
Except during your initial 30 days of eligibility and during the annual benefits open enrollment period, federal regulations prohibit you from enrolling in, canceling, or changing your participation in the flex spending account plan unless you experience a qualifying life event. Examples of these events include marriage, divorce, and the birth of a child. Any change must be consistent with your qualifying life event. The deadline for making these changes is 30 days from the date of the qualifying life event.
When Your Berklee Employment Ends
Once your Berklee employment ends, your pre-tax contributions to your account(s) end. If you have funds remaining in your account(s), you may continue to request reimbursement for expenses incurred from the beginning of the plan year (January 1) through your last day of employment. The deadline for requesting reimbursement for a plan year is March 31 in the year immediately following the plan year.
COBRA for Healthcare Reimbursement Account
If, at the time your employment ends, your eligible incurred expenses are less than your medical care reimbursement account balance, you may wish to enroll in FSA COBRA. With FSA COBRA, you contribute to your account (with post-tax dollars) and thereby permit expenses you incur while on COBRA to be considered for eligibility for reimbursement. Contact Crosby Benefits, Inc. (1-800-462-2235) for more information.