FlexElect Reimbursement Accounts
FlexElect Changes for 2013
- Beginning January 1, 2013, the Annual Maximum for the Medical Reimbursement Account has been reduced from $5,000 per year to $2,500 per year. See page 6 and 9 of the FlexElect Handbook for more detail.
- We have added some clarifying language to page 4 of the FlexElect Handbook under Medical Reimbursement Accounts under the new heading, Payment of claims. The description under this heading reads, “Your annual amount is available to you from your first day of eligibility. In other words, the funds do not have to be in the account before the annual amount can be paid.”
- On page 7 of the FlexElect Handbook, under Dependent Care Reimbursement Account, we have a note that reads, “Unlike the Medical Reimbursement Account, your funds must be deposited in your account and the service period has to have passed before your Dependent Care Reimbursement account claims can be paid.”
- For employees in the MyCalPAYS system only: if you have a Dependent Care Reimbursement Account and take an unpaid leave, your deductions will stop while you're out on leave. When you return, your deductions will automatically resume and increase so you will reach your annual amount. If you don't want your deductions to increase, submit a Reimbursement Account Enrollment Authorization form to lower your annual amount. (Returning from a leave of absence is a permitting event, allowing you to change or cancel deductions for your Dependent Care Reimbursement Account.)
Reimbursement Account Overview
This program lets State employees set aside money in a reimbursement account to pay for certain kinds of expenses. You can increase your take home pay and decrease your taxable income. You specify the amount to be deducted from your paycheck, and the deductions occur before tax withholding, reducing tax liability. We offer two types of accounts.
When you enroll in a reimbursement account, you designate an amount to be deducted each month from your wages. That money is automatically deposited in your account for one plan year. After you receive health-related or dependent care services during that year, you submit a claim for reimbursement from your account. Your reimbursement check is mailed to you.
Please read the plan handbook (2013 Handbook - PDF) (2012 FlexElect handbook - PDF) very carefully before making a decision about enrolling in the program. You may wish to seek the advice of a qualified tax consultant. This program offers many choices, and not all of them are beneficial for everyone.
Contact your HR Office if you have any questions that aren't answered here or in the plan handbook.
You may enroll in a reimbursement account within 60 days after becoming "newly eligible" for these benefits or during the annual Fall open enrollment period.
Who Can Enroll
You're eligible to enroll in a reimbursement account if you have a permanent position that is half- time or more. If you have a limited term (LT) or temporary (TAU) position, you're eligible if you have a mandatory right of return to a permanent position that is half-time or more unless you are in the CoBen Program. CoBen employees are eligible even if they are in a LT or TAU appointment. If you're a permanent-intermittent employee, you're not eligible to enroll in a reimbursement account.
Open Enrollment for FlexElect Medical Reimbursement Accounts and Dependent Care Reimbursement Accounts is September 10, 2012 through October 5, 2012. If you want to enroll or re-enroll, contact your personnel office for the necessary forms.
Open Enrollment forms must be signed and submitted to your personnel office no later than October 5, 2012. All open enrollment actions will be effective January 1, 2013.
If you are currently enrolled in a FlexElect Reimbursement Account and want to participate again next year, you must re-enroll.
If you enroll or re-enroll into a FlexElect Reimbursement Account during open enrollment, you have until December 31, 2012 to cancel or change your election.
If you enroll in a reimbursement account during the open enrollment period, your enrollment is effective beginning January 1st of the following year through December 31st of that year. You must re-enroll each year during open enrollment if you want to participate in a reimbursement account the following year.
Besides the annual open enrollment period, you also have the opportunity to enroll in a reimbursement account within 60 days after becoming "newly eligible." You're newly eligible if:
- you're a new State employee hired after the open enrollment period;
- you were on an approved leave of absence during the entire open enrollment period;
- you experience a change in status that permits you to enroll as newly eligible. If your change in status results in a concurrent approved leave of absence (e.g., birth of child followed by a maternity leave), you may enroll by the deadlines specified below after you return to work; or
- your time base/employee designation changes from one that was ineligible to one that is eligible, or you change from a permanent-intermittent position to a permanent position with a time base of half-time or more.
Deadline for newly eligible employees to enroll:
If you're newly eligible and want to enroll in a reimbursement account, you must submit enrollment forms to your HR Office within 60 days after becoming newly eligible. If you complete your forms correctly, and the State Controller's Office receives them by the 10th of the month, your enrollment is effective the 1st of the following month (except when the 10th is on a weekend or holiday, in which case the cut-off date will be on the next regular workday).
If you're newly eligible, your last possible effective date of participation in the 2012 plan year is December 1, 2012. For your enrollment to be effective December 1, 2012, the State Controller's Office must receive your enrollment form by November 10, 2012. Forms received after that date will be processed for the 2013 plan year.
If you enroll in a reimbursement account as a newly eligible employee, you may only claim expenses incurred from the effective date of your participation through December 31.
Instructions for completing the form
The form you use to enroll in reimbursement accounts is linked below. Refer to the following instructions when completing these forms. Please type or print using a ball point pen.
Section 1 - Enrollment:
- If you're enrolling during the annual open enrollment period, check Item A.
- If you're "newly eligible" and enrolling outside the open enrollment period due to a permitting event, check Item B.
- If you're changing your enrollment due to a permitting event, check Item C.
- If you're canceling your enrollment, check Item D.
Section 2 - Social Security Number:
Enter your Social Security number.
Section 3 - Name:
Print your first name, middle initial, and last name.
Section 4 - SCO Use Only:
SCO will complete.
Section 5 - Total Monthly Amount to be Deducted:
If you're enrolling in a medical account, enter the total amount in Item 5A you want deducted from your paycheck each month and deposited in your medical account. If you're enrolling in a dependent care account, enter the total amount in Item 5B you want deducted from your paycheck each month and deposited in your dependent care account.
Section 6 - SCO Use Only:
SCO will complete.
Section 7 - Employee Signature:
Read this section carefully, then sign and date the form on the line marked. This section contains important information you should be aware of when enrolling. Your signature certifies you have read the information and agree to the terms and conditions of the program as outlined on the STD. 701R and on this website.
Your HR Office must complete.
We recommend you make a copy of your completed form before you send it to your HR Office. Once your HR Office completes the "Agency Use Only" sections, the original copy is forwarded to the State Controller's Office. Your HR Office is instructed to keep a copy in your personnel file and send you a copy.
You can't change or cancel your enrollment during the plan year unless there is a change in your status, called a "permitting event." See Changes in status ("permitting events") for a list of "permitting events."
If you increase your deduction amount because of a permitting event during the plan year, you may only claim the increased amount for expenses incurred from the effective date of your change (not the permitting event date) through December 31st.
If you enroll in a reimbursement account, a $2.50 fee is deducted from your after-tax salary each month. This fee covers administrative costs of the program.
Extension of Benefits
The IRS rule on deferred compensation allows payment for medical and dependent care expenses incurred up to two and one-half months after the end of the plan year. In other words, you may use money deducted in 2013 to pay for medical and dependent care expenses incurred up to March 15, 2014. You still have until June 30, 2014 to claim expenses incurred up to March 15, 2014 and any unused amount at that time will be forfeited pursuant to IRS Rules.
Claims are paid in the order which they are received. If you have an account balance in your prior plan year account, and submit a claim for service during the grace period (up to March 15 of the following year), the expense will automatically be paid from your prior plan year's account.
Because of this, it is important that you file claims in the order that your expenses are incurred. This will help to assure that you maximize the use of your accounts for both plan years.
Deadline to Claim Funds
To ensure you get back all the funds in your reimbursement account, you must submit claims for services provided in 2013 by June 30, 2014.
Use It Or Lose It
Any funds left in your account after the June 30, 2014, deadline are forfeited.
- Once an election is made (after a newly eligible permitting event), you must experience another permitting event to change your election, even if you are still within the 60-day time period.
- Over-the-counter medicines and drugs (not prescribed by a physician) are no longer allowed as a reimbursable expense through a Flexible Spending Account due to a change in the Internal Revenue Code. You're required to submit a prescription from a physician in order to be reimbursed for such items as allergy medications, smoking cessation medications, aspirin, cold medications, vitamins and nutritional supplements, etc.
- IRS Rules allow coverage of married and unmarried dependent children under their parents' health and dental plans up to age 26. You may submit claims for reimbursement for medical expenses for dependents that are not age 27 or older at any time during the plan year.
- State employees who are dependents on their parents' state-sponsored benefits are now eligible to receive the Flex Cash in lieu of coverage. This is a change from previous years and brings us into compliance with the new federal health reform requirements.
- The mileage rate for services provided beginning January 1, 2012 is 23 cents per mile.
Money deducted from your paycheck for a reimbursement account is not taxable, nor are the reimbursement payments. That lowers the amount of taxes you owe.
The examples below show the monthly tax savings available by enrolling in a medical or dependent care reimbursement account. These are only examples. Actual tax savings vary from one individual to another, depending on deduction amount, salary, marital status, exemptions, and participation in other tax savings programs such as Savings Plus. (Calculations are based on information from the Paycheck Calculator on the State Controller's Office website for the 2012 Tax Table.) See 2013 Flex Handbook for sample calculation.
While everyone benefits more by participating in the State's medical reimbursement account, some people are better off claiming their dependent care expenses on their tax return. This issue is explained further in the dependent care account section. Before you make a final decision to enroll in a reimbursement account, it's a good idea to check with a tax advisor if you're unsure which option offers you the best tax advantage.
Reimbursement Claim Instructions
This section describes how to claim reimbursement from your account. Remember, the medical service or supply and/or dependent care must be provided before you can submit the claim. You also need to provide verification of the expense, described below.
Fill out Reimbursement Claim Form. (You'll receive a supply of claim forms in the mail before the plan year starts.)
Medical account claims
If claiming reimbursement from a medical account, attach doctor's statement, itemized bill, evidence of benefits statement, etc. A cancelled check is not acceptable documentation. The statement must have the date of service, type of service, and amount you are responsible for paying.
Dependent care account claims
If claiming reimbursement from a dependent care account, attach a statement signed by your provider or have your provider sign in the space provided on the claim form. If you attach a statement, it must show the provider's name, beginning and ending dates of the dependent care service that was provided, the amount, and the provider's tax I.D. or Social Security Number. (If your provider signs the statement on the form, that information is requested on the form.)
You may submit claims as often as you like. If you pay your provider in advance, such as paying a daycare provider on the first of the month for that month's daycare, you may prefer to submit your claims every week or two rather than waiting until the end of the month. (Make extra copies of your original statement if you plan to submit claims more frequently.) You can also break down your monthly payment into weekly or biweekly service periods, and pro-rate the expense on your claim form.
Mail your completed form and required documentation to Application Software Inc. (ASI), the recordkeeper. The address is:
P.O. Box 6044
Columbia, MO 65205-6044
You may also Fax your claim form and supporting documentation toll-free to ASI at (877) 879-9038.
Once your claim form is processed, a tax-free reimbursement check is mailed to your home.
The address the State Controller's Office has on file for you is the address where your check is mailed. For that reason, it's important that you verify with your personnel office that the State Controller's Office has your correct address on file. If the address is incorrect, or you move while enrolled, you need to complete an Employee Action Request (STD. 686) so the State Controller's Office can update its records. This form is available from your personnel office.
Claim Rejection Procedure
If your claim is rejected (partially or in full), we'll send you a rejection letter (letters are mailed daily). If your claim is received during the Run-Out Period (January through June of the following plan year), and additional documentation is required, you have 15 calendar days from the date listed on the rejection letter to resubmit. You should include the rejection letter along with the documentation being resubmitted.
Request Forms and Information
Additional claim forms (CalHR Form 351)
are available at calhr.ca.gov
. If you have questions about how to fill out the form, what documentation to attach, or the status of a claim you already have submitted, call ASI at 1-800-659-3035 or e-mail ASI through their website at asiflex.com
. ASI also has a 24-hour InfoLine at 1-800-366-4827.
General account information is available on the ASI website at asiflex.com
using your PIN. Your PIN is a randomly assigned alpha numeric identifier that was included with your quarterly account statements. If you do not have access to your PIN, please contact ASI's customer service center at 1-800-659-3035 for additional assistance.
There are three payment cycles for processing valid reimbursement claims:
- If ASI receives your claim by the 1st of the month, the State Controller's Office (SCO) will issue your reimbursement check will between the 14th and 16th of that month.
- If ASI receives your claim by the 10th of the month, SCO will issue your reimbursement check between the 24th and 26th of that month.
- If ASI receives your claim by the 20th of the month, SCO will issue your reimbursement check between the 3rd and 5th of the next month.
The minimum reimbursement amount that will be paid from your account is $10. If you submit a claim for less than $10, the payment will be held until your total reimbursement claims equal $10 or more.
Permanent-Intermittent Employees: Time Base Changes
Grace Period Q&A
The IRS Revenue Notice 2005-42 was approved in May, 2005. This notice permits a grace period of 2 months and 15 days immediately following the end of each plan year during which unused contributions into either your medical or dependent care flexible spending account (FSA) may be reimbursed for qualified expenses incurred during the grace period.
This means, for example, since our FSA plan year ends on December 31, 2013, you may incur qualified expenses up to March 15, 2014, and use any unspent funds from your 2013 plan year account.
The grace period should not be confused with the run-out period which is the period during which you may submit claims for reimbursement out of your prior plan year's accounts. The State of California's run-out period ends on June 30th. This means that you will have until June 30th to submit claims for reimbursement for expenses in the prior plan year.
How does the Revenue Notice affect my medical and dependent care FSA?
- The IRS Revenue Notice allows you to incur qualified medical or dependent care expenses for the current plan year until March 15 of the following year, and to be reimbursed with unspent funds from your prior plan year account. For example, if on January 1 you have $200 left in your prior plan year account, you can incur medical or dependent care expenses up until March 15 which will be paid until your prior plan year's account has been exhausted.
What is a grace period?
- A grace period is the two months and fifteen days immediately following the end of the plan year, in which you or your qualified dependent(s) can incur qualified expenses and use any unspent funds from prior plan year account funds. The grace period is January 1 through March 15.
What is a run-out period?
- A run-out period is the period of time in which a participant has to submit claims for reimbursement out of the prior plan year's account. Our run-out period is January 1 through June 30.
What happens to my claims during the grace period if I have a FSA Account for the previous and current year?
- Claims will be paid in the order in which they are received. If you have an account balance in your prior plan year's account, and a claim is submitted with a date of service during the grace period, the expense will automatically be paid from your prior plan year's account. If a claim is submitted at a later date, with a date of service in the prior plan year, and all funds have been paid from your prior plan year account, the claim will not be paid.
Can I tell ASI (the Third Party Administrator) which plan year I want my claims to be paid from?
- Claims will be paid in the order in which they are received. You may not request for a claim to be paid from a specific plan year. However, you can control the order in which you submit or file your claims. Always make sure that you file older claims first to ensure that funds are paid from the previous plan year first.
How should I calculate my future annual contributions for my medical and dependent care expense accounts?
- You should continue to use only twelve months of expenses for calculating expenses for our FSA's. The new Revenue Ruling is intended to provide a safety net for you only if you have not incurred all of your anticipated expenses during the previous plan year.
What happens if I do not submit my reimbursement claims from the prior plan year by June 30th?
- If a reimbursement request is not submitted by the June 30 deadline, funds will be forfeited.
Example: First in First Out Paper Claim
Your 2012 Medical Reimbursement Account balance is $100 and your 2013 Medical Spending Account balance is $1,000. You incur a $50 medical expense on January 15, 2013 and submit a paper claim on January 20, 2013. The claim will be paid out of your 2012 account leaving a balance of $50 in your 2012 account and a balance of $1,000 in your 2013 account.