Frequently Asked Personal Choice Account Questions

General:
•What does Personal Choice Account offer?
•Do I have to participate in all choices?
•Are there any risks? What are they?

Eligibility and Elections:
•Is this an automatic election or do I need to sign a form?
•Do I need to change insurance providers to participate?
•Who is eligible to participate?
•Under what circumstances can the annual election be changed?
•What is the maximum allowable allocation for an FSA?
•If I terminate employment, what happens to the money I have allocated to the plan?
•If I have leftover funds in my health care account, can I transfer those funds to my dependent daycare account?
•If my spouse and I are both employees of my employer, can we claim each other's expenses on our respective accounts?
•What are "work-related" dependent daycare expenses?
•Is kindergarten tuition an eligible expense?
•What about daycare while I do volunteer work?
•Can I use the dependent care account for care of my toddler while I am home on maternity leave?
• I pay a neighbor to watch my 13-year-old after school. Is this an eligible expense?
•My 16-year-old daughter cares for my 8-year-old son after school. Can I pay my daughter and file those expenses through my flex plan?

Claim Filing Procedures:
•How do I get reimbursed for healthcare expenses?
•I've been deducting healthcare expenses on my taxes. Can I do this while enrolled in a flex plan?
•How soon must employees submit claims?
•What are qualified expenses?
•Can a participant be reimbursed before they have contributed the amount to the account?
•I've been deducting healthcare expenses on my taxes. Can I do this while enrolled in a flex plan?
•Once I file an eligible expense, how long do I have to wait until I am reimbursed by The Personal Choice Account?
•Will I receive a report showing me the balances in my account?
•How is orthodontia reimbursed?
•When are expenses considered to have been incurred?
•What type of documentation should I submit for a prescription?
•If I have leftover funds in my health care account, can I transfer those funds to my dependent daycare account?
•Will I need to submit any additional information to substantiate that the expense being claimed was for medically necessary treatment?


General:

What does Personal Choice Account offer?
Personal Choice Account is a Section 125 Cafeteria Plan that offers employees a choice to pay for certain qualified benefits on a pre-tax basis. Paying for certain benefits with pre-tax dollars reduces the amount you pay in taxes and increases their take-home pay. We offer three options for employers. They are:
1. Pre-tax treatment of insurance premiums (Employer Sponsored Group Plans only)
2. Health Care Reimbursement Account (i.e. medical, dental, and vision expenses)
3. Dependent Care Reimbursement Account (daycare)

Do I have to participate in all choices?
No. Those who do not have children, a spouse or parents requiring dependent care will not be interested in the Dependent Care Account. Most will probably want to participate in the pre-tax premium coverage and the Health Care Reimbursement Account. Employees can enroll in any combination of the choices or in none at all. The decision is yours.

Are there any risks? What are they?
The IRS states that if you do not have expenses that equal or exceed the money you have set aside on a pre-tax basis, you lose the remaining balance in your Flexible Spending Account at the end of the year. This is why we ask you to be cautious with your election. We provide a tool to assist you in forecasting your expenses before making your elections.

return to top

ELIGIBILITY AND ELECTIONS:

Is this an automatic election or do I need to sign a form?
Every employee must complete a form to enroll or to decline participation. Return your completed form to the Human Resource Department on or before the last day of enrollment. Your Human Resource Department will notify you of the deadline.

Do I need to change insurance providers to participate?
Because The Personal Choice Account is not tied to an insurance plan or company, there is no need to change insurance providers.

Who is eligible to participate?
Only employees are eligible to participate in the FSA. Therefore, two percent or more owners in an S Corporation, sole proprietors, partners in a partnership, LLCs, and LLPs are not eligible to participate in the plan.

return to top

Under what circumstances can the annual election be changed?
Changes to the dependent care account can be made if the participant experiences a qualified change in status (marriage, divorce, birth, death, adoption, a spouse changing employment, or a job shift change for the employee or their spouse that directly affects their child care). Changes to the unreimbursed health expense account are based on a more limited set of qualifying events, and can be made only if the plan you have adopted allows changes to this account. The change you make must be consistent with the qualifying event. If you have any of the above changes, you must contact your Human Resources Department within 30 days of the change. (more)

What is the maximum allowable allocation for an FSA?
It varies by the type of account. For a dependent care FSA, the maximum is $5,000 per calendar year, or $2,500 if married filing separately. With a healthcare spending account, the employer determines the maximum annual election. With a premium only plan, no such maximum applies, as the premium is the only pre-tax deduction.

If I terminate employment, what happens to the money I have allocated to the plan?
You will have a grace period (determined by your employer) following termination to submit claims for reimbursement of expenses that were incurred prior to your termination date. Any unused amount after the grace period will be forfeited unless you elect to continue your participation in the Health Care Reimbursement Account under your COBRA rights. If you elect to continue under COBRA you will need to make the deposits on an after tax basis.

return to top

If I have leftover funds in my health care account, can I transfer those funds to my dependent daycare account?
No. Each account is separate and distinct. Funds can not be transferred between accounts.

If my spouse and I are both employees of my employer, can we claim each other's expenses on our respective accounts?
You can claim spouse expenses on your own account; and your spouse can claim your expenses on their account. However, you cannot both file for the same expenses under both accounts. In other words, you cannot "double-dip."

What are "work-related" dependent daycare expenses?
The expenses must be incurred to enable you (and your spouse if married) to be gainfully employed. Gainful employment does not include unpaid volunteer work, or volunteer work for a nominal salary.

Is kindergarten tuition an eligible expense?
No. The IRS does not consider educational or tuition expenses as eligible expenses, including kindergarten, first grade and higher. You can claim expenses for before or after school care, or nursery school expenses provided the care is custodial in nature and not educational. Click here for a sample list of eligible dependent care expenses.

return to top

What about daycare while I do volunteer work?
No. The expenses must be incurred to enable you to be gainfully employed. Gainful employment does not include unpaid volunteer work, or volunteer work for a nominal salary. Click here for a sample list of eligible dependent care expenses.

Can I use the dependent care account for care of my toddler while I am home on maternity leave?
No. IRS regulations state that the expenses incurred must be work-related. The amounts paid while you are off work because of illness, including maternity leave are not eligible.

I pay my neighbor to watch my 13-year-old after school. Is this an eligible expense?
No. The individual being cared for must meet the "qualifying person test" as prescribed by the IRS. A qualifying person includes your dependent who was under age 13 when the care was provided and for whom you can claim an exemption.

My 16-year-old daughter cares for my 8-year-old son after school. Can I pay my daughter and file those expenses through my flex plan?
No. You can count work-related payments you make to relatives only if they are not your dependents. Do not count any amounts you pay to:
•A dependent for whom you (or your spouse) can claim an exemption
•Your child who is under age 19 at the end of the year, even if he or she is not your dependent.

return to top


CLAIM FILING PROCEDURES:

Who determines what is an eligible expense that I can deduct on a pre-tax basis?
The IRS formulates the guidelines for the Reimbursement Accounts and determines what is eligible. Here is a sample list of eligible expenses.

How do I get reimbursed for Health Care expenses?
To obtain reimbursement it is best to use an Explanation Of Benefit (EOB) print out from your insurance carrier and a Reimbursement Request Form. For your convenience, additional Reimbursement Request Forms are available on our website or from your Human Resource Department. If the expense is for a service that is not eligible for insurance (i.e. eyeglasses) send a copy of the itemized statement for the services that were provided. Please note that we cannot accept cash register receipts, credit card bills, receipts or cancelled checks as proof of service. This flyer will give you tips on how to expedite your claim and insure that all information is included. Note that incomplete claims may be delayed or denied.

How soon must employees submit claims?
Employees may submit requests for reimbursement at any time during the year. All claims must be received in our office no later than the run out period prescribed by the group. PCA suggests a run out period of 90 days after the plan year ends, however, participants should confirm as to their groups specific run out period. The claims must be incurred during your period or active coverage, or by the end of the plan year, whichever comes first. Some employers may also elect an extension period which would affect the date in which services must be incurred.

Can a participant be reimbursed before they have contributed the amount to the account?
It depends on the type of account. With a dependent care account, the eligible reimbursement amount is available only after the funds have been payroll deducted and those funds have been received by Personal Choice Account. For the unreimbursed health expense account, the reimbursement process will start after the plan year is established and we have received the first payroll reduction of the plan year. Participants have access to their total annual election at this time.

return to top

I've been deducting healthcare expenses on my taxes. Can I do this while enrolled in a flex plan?
Any amount reimbursed by a flexible spending account reduces, dollar for dollar, the amount you may claim on your tax return. Being reimbursed for expenses and also claiming them as itemized deduction is commonly known as double dipping and is not allowed under the IRS regulations.

Once I file an eligible expense, how long do I have to wait until I am reimbursed by Personal Choice Account?
The Personal Choice Account processes claims on a daily basis. Generally, claims are processed within 2-3 days of being received. Ensuring that your claim forms are completed will expedite your request. Also note that some expenses may require additional information. Reimbursement checks are mailed to the employee's home or can be sent via direct deposit to your savings or checking account. Some groups have a $10.00 minimum check amount unless it is the remaining balance in your account, however this does not affect direct deposit reimbursement.

Will I receive a report showing me the balances in my account?
Yes, with every reimbursement you will receive a check stub showing you the details of your account. During the third quarter of the Plan Year a report will be mailed to employees who still have money in their accounts. This reminds you that you must use the money you have set aside or forfeit it at the end of the year. You may also access this information 24/7 on this website or by telephone/email 8:00am - 5:00pm PST.

How is orthodontia reimbursed?
Click here for a brochure outlining all of the details regarding orthodontic reimbursement.

return to top

When are expenses considered to have been incurred?
Expenses are "incurred," IRS rules say, only after the service or item has been provided, not when the employee is formally billed or pays for the service.
•For multiple step procedures (such as crowns and dentures) the date incurred is when the device is ordered.
•For items that you must order and later pick up (such as contacts and eyeglasses) the date incurred is the date the item was ordered.
•For mail order items (such as prescriptions) the date incurred is when the item is ordered.
•For prescriptions from a pharmacy, the date incurred is indicated on the "script" or informational.
•For orthodontic treatment please click here for specific information.

What type of documentation should I submit for a prescription?
The pharmacy receipt (not the cash register receipt), often times called a "script", that includes the pharmacy name, patient name, date the prescription was filled, the name of the drug, and dollar amount should be submitted with your claim. Another easy way to submit prescription expenses is to ask your pharmacy to print a listing of all your prescription purchases for a given time period for each family member and submit with your claim form.

If I have leftover funds in my health care account, can I transfer those funds to my dependent daycare account?
No. Each account is separate and distinct. Funds cannot be transferred between accounts.

return to top

Will I need to submit any additional information to substantiate that the expense being claimed was for medically necessary treatment?
In some cases, you will be asked to provide a "Letter of Medical Necessity" or "Certification of Medical Necessity" from a physician to substantiate your claim. For example, treatments such as massage therapy or weight loss programs that can be for both medical and non-medical reasons may be subject to this requirement. If you are seeking reimbursement for one of these items, a Letter of Medical Necessity or Certification of Medical Necessity is required once each plan year. Click here for a sample list of eligible expenses. Once your claim is received it is reviewed and you will receive a letter if this additional information is required.

Have another question about HRAs? Feel free to contact us.

return to top