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| IS - 2036 Flexible Spending Accounts | Human Resources Release Date: 11/29/00 Revision 1: 1/10/05 Revision 2: 8/11/06 |
| Policy | |
Central New Mexico Community College (CNM) offers a Flexible Spending Accounts (FSA) Program which enables eligible employees to set aside a portion of their annual salary to pay qualified non-reimbursed medical expenses and qualified dependent care expenses incurred during the year before taxes are calculated.
The FSA Program is a fringe benefit authorized by the Internal Revenue Code and regulated by the Internal Revenue Service (IRS). IRS regulations define which expenses qualify for reimbursement under this plan. Nothing in this policy imposes or limits requirements, which may be otherwise imposed by law. Tax law changes may affect this Program.
2.1 Employees can participate in the FSA Program by setting aside part of their pay on a before-tax basis (see Enrollment). Two account plans are available: Health Care Spending Account and Dependent Child Care Spending Account.
2.1.1 A Health Care Spending Account pays certain qualified medical, dental, prescription, vision, and hearing care expenses not covered by insurance plans for eligible employees or their eligible dependents. IRS Publication 502 identifies qualifying medical expenses.
The employee's contribution may not exceed $3,000 per plan year.
2.1.2 A Dependent Care Spending Account reimburses the employee for dependent care at a licensed facility, services from unrelated individuals, care at dependent care centers, and other qualified dependent care expenses.
The employee's contribution may not exceed $5,000 per plan year.
The money an employee sets aside for the FSA Program will be subtracted from the gross pay before income and Social Security taxes are calculated, thus reducing taxable income. Employees choose how much to contribute up to a maximum of $3,000 for medical expenses and $5,000 for dependent child care expenses.
3.1 The annual contribution amount chosen is collected through payroll deduction. There are a total of 24 pay periods per plan year.
The plan year for the FSA Program begins on January 1 and ends on December 31. Continued participation requires re-enrollment each year.
The following employees are eligible to participate:
- Regular staff employees
- Full-time Faculty
6.1 Newly hired eligible employees may enroll in the FSA Program no later than thirty-one (31) days following their date of employment.
6.1.1 To enroll, employees complete the FSA Enrollment form for either or both FSA programs (Dependent Care, Health Care) and submit to Human Resources.
6.2 Current employees must enroll or re-enroll for the following plan year during the open enrollment period, which normally occurs in the fall of the year and prior to the end of the calendar year.
6.3 Employees may enroll in one or both of the Flexible Spending Accounts.
7. Rules Governing Reimbursable Expenses
The FSA Program is regulated by IRS regulations, which require that non-reimbursed dollars be forfeited. Therefore, participants should carefully estimate their contribution to each of these spending accounts.
7.1 Any unused money which the employee has not been reimbursed to pay for eligible expenses will be forfeited at the end of each plan year. The employee will have ninety (90) days after year-end to submit claims with dates of service in the prior year.
7.1.1 When enrolling during an open enrollment period, employees should estimate their expenses for the following plan year.
7.1.2 Employees enrolling at any other time should estimate their expenses for the balance of the current plan year.
7.2 Money cannot be transferred between the Health Care Spending Account and the Dependent Care Spending Account.
7.3 The money in the Dependent Care Spending Account cannot be claimed until after the payroll deduction has been made and the service has been rendered.
8.1 To receive reimbursement for qualifying expenses, the employee must complete an FSA claim form(s) (Health Care Reimbursement Account Request, Dependent Care Reimbursement Account Request) and itemization sheet and attach the original receipts, or payment, and send the claim form to the Human Resources Department and/or FSA Administrator.
8.1.1 The FSA Plan Administrator will verify that the submitted receipts are eligible for reimbursement and that funds are available in the employee's reimbursement account.
8.2 A reimbursement check is generally mailed to the employee within thirty (30) days.
8.3 A minimum amount for reimbursement is $50.00 per submittal except for the final payout.
9. Changes to or Termination of the Plan Election
9.1 The IRS requires that deductions continue until the last pay period in the plan year, unless there is a change in employment status.
9.2 Once a plan year begins, Health Care Spending Account contribution amounts and Dependent Care Spending Account contribution amounts may be changed during a plan year only if the employee has a qualified change in family or employment status. Any change made must be consistent with the qualifying event.
9.2.1 If there is a change in status such as birth of a child or an adoption, an employee may request a change to the Dependent Care Account upon submitting proof of the change to Human resources.
9.3 An employee's participation in this plan automatically stops when the employee retires or separates from the College, when the employee is no longer an eligible employee, or as of the end of the plan year (unless the employee re-enrolls during open enrollment).
Upon termination of employment, any overpayment from the medical spending account will be taken from the employee's final paycheck as allowed by IRS regulation.
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| Forms: | CNM Pre-Tax Premium Plan Health Care Flexible Spending Account Dependent Care Flexible Spending Account Health Care Reimbursement Account Request Health Care Spending Account Claim Itemized Category Dependent Care Reimbursement Account Request |
| Support Materials: | Not Applicable. |
| Reference Materials: | IRS Regulation |