NRAO Home > Human Resources > Dental Plan - General Information

Flexible Spending Accounts Plan

The following pages describe the principal features of your Flexible Spending Accounts plan. Such accounts allow you to pay for a variety of health care, dependent day care, and commuter or parking expenses on a “before-tax” basis, thereby reducing your gross earnings for tax purposes. Enrollment in the Flexible Spending Accounts plan is optional.

Outline of the Flexible Spending Accounts Plans

The Health Care, Dependent Care, Commuter, and Parking Reimbursement Accounts enable you to deposit money voluntarily through automatic salary reductions, to one or more accounts. You can then draw out money from the appropriate account to reimburse yourself for costs that you have incurred.

The big advantage to these accounts is that you contribute “before-tax” dollars. In other words, you set aside money through salary reduction before taxes are taken out of your paycheck. By paying for these expenses with before-tax dollars, you reduce your gross earnings. This, in turn, lowers the amount of federal income, state income and Social Security taxes you pay, which increases your spendable income.

Who Is Eligible to Participate? - Active Employees - All regular employees who work at least 20 hours each week are eligible to participate in the Flexible Spending Accounts plan.

Participation in the Dependent Care Reimbursement Account also requires that you are:

• A single parent and require care for your dependent(s) so you can work.
• Married and require day care for your dependent(s) so you can work and your spouse can work or be a full-time student.

Enrollment - The Health Care and Dependent Care Reimbursement Accounts work on a calendar year basis. Open enrollment is held before the start of each year, generally in November, with participation starting on January 1. New employees will be given 31 days after their first day of employment to enroll for the remainder of the calendar year.

YOU MUST RE-ENROLL IN HEALTH CARE AND DEPENDENT CARE REIMBURSEMENT ACCOUNTS EACH YEAR.

Enrollment in the Commuter and Parking reimbursement accounts continues until canceled by you. There is no need to enroll each year.

During open enrollment, you decide how much you want to contribute to each Reimbursement Account for the coming year. On the election form, you authorize an annual salary reduction amount, which will be made in equal monthly or bi-weekly installments (depending on your pay status) from your regular paycheck and deposited to your Reimbursement Account(s).

Health Care Reimbursement Account - You can use the Health Care Reimbursement Account to reimburse yourself for eligible health care expenses with before-tax dollars. You determine how much out-of-pocket expenses you expect to have during the plan year, and fund your Health Care Reimbursement Account through automatic salary reduction. You draw money out of your Account to reimburse yourself for the health care expenses as you and your eligible dependents incur them.

Your eligible dependents include:

• Your spouse.
• Your unmarried children up to 19 years of age.
• Your unmarried children under age 25 who are full-time students at an accredited college.
• Your unmarried children who are mentally or physically incapable of earning their own living.

What Health Care Expenses are Reimbursed? - expenses that are reimbursable under the Health Care Reimbursement Account are those goods and services currently allowed by the IRS as an income tax deduction. Only those expenses incurred during your plan participation period are reimbursable. If you terminate your enrollment in the plan early, only those expenses up to the date of plan termination can be considered for reimbursement.

A list of eligible expenses is available at the following link:

http://www.cigna.com/our_plans/medical/fsa/fsa_health.html

This list is compiled from IRS Publication 502 Medical and Dental Expenses and complies with IRC Section 125.

How Much Can You Contribute Each Year to the Health Care Reimbursement Account? - In any calendar year, you can contribute any amount from $100 to $5,000. As a new employee, you are given the opportunity to participate in the Health Care Reimbursement Account on your date of employment. The maximum amount you can contribute will be pro-rated based on the number of months you will work during that year. For instance, if you start on July 1, you can contribute a maximum of $2,500 for the remaining six months of that year.

How Much Should You Contribute? - That’s entirely your decision. Figure out how much you think you’ll spend in the coming year on health care expenses that are not covered by insurance, such as deductibles, coinsurance and any other IRS approved expenses, such as eyeglasses. When estimating your anticipated health care expenses, it may be helpful to review the non-reimbured health care expenses you incurred during the previous year.

It’s extremely important that you carefully estimate the amount you choose to contribute, since under the IRS regulations, any amount that you do not use by the end of the calendar year will be forfeited. You have until March 31st of the following year to request reimbursement on expenses made through December 31st. Expenses must have been incurred prior to December 31st to be eligible.

Dependent Care Reimbursement Account - Under the Dependent Care Reimbursement Account you can reimburse yourself for eligible dependent care expenses with before-tax dollars. Before each calendar year, you estimate how much you will be spending in the coming year on day care. Then to cover these costs, you contribute to the Account through automatic salary reduction. Throughout the year, you draw money out of your Account and reimburse yourself for payments you have made to your day care provider.

By using before-tax dollars to pay for day care expenses, your actual cost is lower because the tax savings reduce your out-of-pocket cost.

What Kinds of Expenses are Reimbursable? - The types of expenses that are reimbursable under the Dependent Care Reimbursement Account are those currently allowed by the IRS as a tax credit. All day care must be rendered by eligible providers.

Eligible expenses include, but are not limited to:

• The care of a dependent in your home by a paid provider.
• The care of a dependent outside of your home by a licensed nursery or day care center.
• Household services, such as housekeeper, provided some portion of the service is to a dependent.

A relative is considered an eligible provider of dependent care as long as he or she is not claimed as your dependent for tax purposes. The provider’s name, address, and Tax Identification or Social Security number must be supplied to receive reimbursement.

Who Are Eligible Dependents? - Expenses may be claimed for:

• A child, under the age of 13, who is claimed as a dependent on your income tax return. Children must be under the age of 13 when they receive the care. If their 13th birthday falls before a summer camp, for instance, that expense is no longer eligible.
• Any dependent you claim for income tax purposes that requires day care because of physical or mental instability.

How Much Can You Contribute Each Year to the Dependent Care Reimbursement Account? - In any calendar year, you can contribute any amount from $100 to $5,000. There are, however, certain guidelines you must follow. If you are married and file a separate income tax return, $2,500 is the maximum amount you may contribute in any calendar year. Your total contribution in any calendar year may not exceed your annual earnings or, if less, your spouse’s annual earnings.

As a new employee, you are given the opportunity to participate in the Dependent Care Reimbursement Account on your date of employment. The maximum amount you can contribute will be pro-rated based on the number of months you will work that year. For example, if you start on July 1, and you are married and file a joint income tax return, you can contribute up to $2,500 for the remaining six months of that year.

How Much Should You Contribute? - Again, only you can decide. Your decision should be guided by how much you anticipate spending on day care in the coming year. It may be helpful to review the expenses you incurred the last year.

It is extremely important that you carefully estimate the amount you choose to contribute since under IRS regulation, any amount you do not use by the end of the calendar year will be forfeited.

Dependent Care Reimbursement Account or Tax Credit - Federal law currently permits an individual to take a tax credit against federal income taxes for allowable dependent care expenses. When considering contributions to the Dependent Care Reimbursement Account, you need to determine if it is better to take the tax credit or to pay for your dependent care expenses yourself and claim a credit for them on your Federal income tax return. This credit reduces your Federal income tax liability by a percentage of your eligible dependent care expenses.

You may use only one of these methods for any given dollar of dependent care costs. You cannot use the Dependent Care Reimbursement Account for a particular expense and also claim a credit for that same expense on your tax return. Also, any amounts you contribute to your Dependent Care Reimbursement Account offset, dollar for dollar, any amounts eligible for the tax credit on your personal income tax return.

You should consult your tax advisor to determine whether it is better for you to reimburse yourself for day care expenses with AUI’s Dependent Care Reimbursement Account, or use the tax credit on your income tax return.

Commuter and Parking Expense Reimbursement Accounts - The Commuter and Parking Reimbursement Accounts can be used to reimburse yourself for eligible expenses incurred for your daily commute to work and/or for parking.

Which Expenses are Reimbursable? - Reimbursable expenses under the Commuter Reimbursement Account are those costs you incur for traveling between your home and work by a qualified van pool or public transportation. A van pool is considered “qualified” when it meets the following criteria:

• Must have a seating capacity of at least 6 adults (not including the driver) and at least 80% of the mileage use must be for purposes of transporting employees in connection with travel between their homes and place of employment.
• The number of employees transported must be at least one-half of the adult seating capacity of the vehicle, excluding the driver.

Reimbursable expenses under the Parking Reimbursement Account include the cost of parking a vehicle in a facility that is near your place of work, or parking at a location from which you commute to work.

Expenses submitted for commuting or parking will be paid only up to the amount of your reimbursable account balance.

How Much Can You Contribute Each Year to the Commuter and Parking Reimbursement Accounts? - In 2008, you can contribute up to $1,380 for the Commuter Reimbursement Account and up to $2,640 for the Parking Reimbursement Account. (These limits are subject to inflation increases annually.)

General Information

Flexible Spending Account Contributions and Social Security - Since Social Security taxes are not taken from your contributions to the Flexible Spending Account Plan, your benefits under the Social Security System could be reduced. This is true if your taxable income, after reducing for the Flexible Spending Account contributions, is less than the taxable wage base for Social Security purposes. The effect on your Social Security benefits will be small, but it is a consideration that you need to take into account.

Does the Use of Salary Reductions for Your Contributions to the Flexible Spending Account Plan Affect Your Other AUI Benefits? -No. Your other AUI benefit coverages and retirement plan contributions are based on your full base salary, and are not affected by Flexible Spending Account contributions.

How Often Can You Change Your Contributions to the Flexible Spending Account Plan? - The amount of pre-tax dollars you choose to contribute to your Health Care and/or Dependent Care reimbursement account(s) will remain in effect for the entire plan year. You may change your contribution ONLY if you have a change in family status. A change in family status is:

• Addition or loss of a dependent.
• Gain or loss of spousal employment.
• Change in marital status.
• Change in employment status. (in either you and your spouse?)
• Substantial reduction or increase in daycare costs.

Can You Transfer Funds Between the four Flexible Spending Accounts? - No. The IRS considers the accounts totally separate; you may not move funds from one account to another.

For Dependent Care expense claims, you will need to provide the name, address, and Taxpayer Identification Number or Social Security Number of your day care provider.

How to File a Claim for Reimbursement - To file a claim, you must complete a reimbursement request form available on the Human Resources webpage and mail or fax to:

Call 800-242-2269 to check status of health care and dependent care claims.

For Health Care expense claims, you should first submit your medical and dental claims to the applicable insurance company. After you receive your Explanation of Benefits (EOB) from the insurance company, submit your claim form for the non-reimbursed portion of your claim to the above reimbursement accounts claim office. Statements of services from mycigna.com are valid proof of expenses for health care reimbursements.

If you have expenses which are not covered under the medical or dental plans, you should submit your itemized bills and a completed Health Care Reimbursement Account Request form directly to Connecticut General.

Cigna will issue checks twice monthly, on the 16th and the last day of the month, for eligible expenses as long as the amount you are claiming is at least $50 (unless it is the final reimbursement of the plan year). Checks are issued on the 16th of the month. If your reimbursement was not received before this time, it will be held for the next check cycle.

For Commuter or Parking expense claims, you must provide receipts for your costs on a monthly basis. A receipt can be any pass, token, fare card, voucher, or similar item entitling you to transportation on mass transit facilities or provided by a qualified van pool or parking facility. Reimbursement by the NRAO will be made on a monthly basis.

How Long Do You Have to Submit Claims for Reimbursement? - You have until March 31 following the calendar year in which you incurred expenses to submit claims for reimbursement. So, for example, if you buy eyeglasses in December and do not receive the bill until January, you would still have up to March 31 to claim the expense, provided there is money remaining in your Health Care Reimbursement Account. An expense is incurred when services are received, not when the bill is paid.

What Happens if You Terminate Employment? - You may continue to submit expenses through the end of the calendar year in which you terminated employment. However, the expenses must have been incurred on or before the day your employment ended.

What Happens if You Die? - If you die while you are an active employee, your surviving dependents may submit requests for reimbursement until December 31 of the year death occurred for expenses incurred up to the date of your death.

What Else Do You Need to Know? - Health Care and Dependent Care Flexible Spending Accounts are allowable under Section 125 of the Internal Revenue Code. Commuter and Parking Reimbursement Accounts are allowable under Section 132 of the Internal Revenue Code. Certain restrictions apply to all accounts.

• Determination of your annual contributions to your Flexible Spending Account(s) must be made prior to the start of the plan year.
• To be eligible for reimbursement, expenses must be incurred in the same year that your salary reductions are credited to the Plan.
• Expenses from one reimbursement account cannot be reimbursed from another reimbursement Account.
• All unused Account balances remaining as of the end of a plan year are forfeited except in the case of Commuter or Parking Reimbursement Accounts which do not include a “use it or lose it penalty”.
• Expenses reimbursed from your Account(s) cannot be claimed as deductions or credits on your federal income tax return.
• Re-enrollment is required each year for the Health Care and Dependent Care reimbursement accounts.
• Enrollment in the Commuter and Parking reimbursement accounts continues until canceled by the employee.

The National Radio Astronomy Observatory is a facility of the National Science Foundation operated under cooperative agreement by Associated Universities, Inc.