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Flexible Spending Accounts Procedure - 63.07.22

College Policy Number/Title:

Howard Community College offers all budgeted and temporary with benefits employees the option to enroll in a flexible spending account for health care and/or dependent care administered through a third party company. The name of the third party company and its contact information can be obtained in HCC’s yearly benefits guide or from human resources.

To participate, employees agree to have an amount of money deducted pre-tax from each paycheck during the calendar year. The college does not withhold federal, state, or local income tax or Social Security (FICA) tax on these employee contributions. As a result, those dollars do not count as income on W-2 forms. When employees draw on flexible spending accounts throughout the year, they may pay for eligible expenses with pre-tax dollars. The money in the flexible spending accounts can be used to cover eligible health and dependent care expenses.

Health Care Flexible Spending Account

Health care expenses not covered under the college's medical/dental insurance plans (or any other health plan) may be eligible for reimbursement under the health care flexible spending account. Participating employees are provided with a debit card that is preloaded with the money they have elected to use for the calendar year. The debit card may be used to pay for health care flexible spending account items, or the employee can pay out of pocket and request reimbursement. Eligible expenses can be found on publications from the third party administrator posted on the human resources portal page. Employees may elect up to a maximum amount, which is listed in HCC’s yearly benefits guide and can also be obtained from human resources.

Dependent Care Flexible Spending Account

Employees may participate in a dependent care flexible spending account to cover childcare expenses for children ages 12 and under. Eligible expenses can be found on publications from the third party administrator posted on the human resources portal page. If employees elect to participate in a dependent care flexible spending account, the amount of the reimbursements will reduce the amount of any other tax credit. The dependent care flexible spending account is limited to a maximum amount determined by the federal government per year. The amount is listed in HCC’s yearly benefits guide and can also be obtained from human resources.

Cautions

Funds that are deducted from paychecks for the dependent care flexible spending account must be used by the end of the calendar year or they are forfeited. The same is true for the health care flexible spending account with the exception that up to $500 that is unused may be carried over into the next calendar year. Materials explaining the forfeiture and carryover rules are available on the human resources portal page.

When an employee with a flexible spending account separates during the calendar year, the ability to expend funds on eligible purchases ends on the date of separation. Any funds that have been deducted from paychecks during that calendar year but not used by the separation date are forfeited, unless the employee elects to continue coverage under COBRA (see procedure 63.07.04, Extension of Group Health Benefits).

Effective Date: 04/12/19

President's Office Use:  VPAF

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