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How is a Reimbursement Account (Health Care or Dependent Daycare) Funded?

During the Open Enrollment period determined by your Company each year, you will determine how much you want to elect for either (or both) reimbursement accounts. The amount you elect will be divided evenly over all pay periods of the plan year.  This means, if you elect $2550.00 for Health Care Reimbursement and $5000.00 for Dependent Daycare and you are paid semi-monthly, your deductions will be $106.25 per pay period for Health Care and $208.33 per pay period for Dependent Daycare.  Those amounts are deducted prior to taxes being calculated to reduce your taxable income.

When are Funds Available for Reimbursement?

The amount you elect for the Health Care Reimbursement Account is available on day one of the plan year regardless of how much you have contributed.  This means you can have a major expense early in the plan year and the full amount, up to your election amount will be reimbursed upon receipt of a valid claim.

The Dependent Daycare Reimbursement Account is dollar in for dollar out so we can only reimburse you the amount you have contributed.  Any claims submitted over that amount will pend in our system and will automatically issue payment when the next contribution is received.

What can a Health Care Reimbursement Account be used for?

The Health Care Reimbursement Account enables employees to pay for expenses that are not covered by insurance with pre-tax dollars. This account allows employees to be reimbursed for out-of-pocket medical, dental, and vision expenses as well as over-the-counter medications (with a valid prescription). Reimbursable expenses are similar to those normally deductible on a federal income tax return (without regard for the 7.5% of adjusted gross income limitation).

They include, for example, expenses incurred for:

  • Deductibles and Office Visit Co-payments
  • Prescription medications, vaccines, birth control and infertility treatments
  • Medical doctors, dentists, eye doctors, chiropractors, osteopaths, podiatrists, psychiatrists*, psychologists*, physical therapists, acupuncturists and psychoanalysts*
  • Medical examinations, X-rays, laboratory services and insulin treatments
  • Hospital care, clinic costs and lab fees
  • Medical aids such as hearing aids (and batteries), dentures, prescription eyeglasses and/or contact lenses, braces, orthopedic shoes, etc.
  • Over-the-counter drugs and medications used for the treatment of a medical condition, injury or illness (requires a valid doctor's prescription)

*proof of medical necessity will be required prior to reimbursement

For a larger list of eligible expenses please click here and enter the access code: link to list

What is a Flexible Benefit Plan?

A Flexible Benefit Plan, also known as a Section 125 Plan, Flexible Spending Account (FSA), or a Cafeteria Plan, gives employees the ability to purchase certain qualified benefits with pre-tax dollars -- essentially, exchanging taxable compensation for non-taxable benefits. These "tax-free benefits" can include:

  • Company Sponsored insurance premiums, including medical, dental and vision premiums
  • Reimbursement of out-of-pocket health care-related expenses
  • Reimbursement of work related dependent daycare expenses

Flexible Benefit Plans are so popular because they offer employees a choice of benefit options and because they allow both employees and employers to save tax dollars. In most cases, you need to spend the funds in your account within the plan year.  However, your employer may provide you a grace period of up to 2½ months after the end of the plan year to spend funds left in either your Health Care Reimbursement Account or your Dependent Daycare Reimbursement Account.  Or your employer may allow you to carry over up to $500 left in your Health Care Reimbursement Account into the next plan year.  Please see your company Flexible Benefit Handbook to see if either of these options is offered by your employer.

What can a Limited (HSA-Compatible) Reimbursement Account be used for?

The Limited (HSA-Compatible) Reimbursement Account enables employees to pay for expenses that are not covered by insurance with pre-tax dollars and still maximize Health Savings Account (HAS) tax savings at the same time! This account allows employees to be reimbursed for out-of-pocket dental and vision expenses as well as post-deductible medical expenses.

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Pension Dynamics WealthCare App

Pension Dynamics WealthCare is developed by Pension Dynamics Company LLC. The app provides a single access point for participants to manage their consumer driven healthcare and other tax favored benefit accounts.

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