Cafeteria Plans 

These plans are three separate options under the Internal Revenue Code (IRC) Section 125, which may be elected separately or in combination to help lower your taxable income. Because cafeteria plans provide tax advantages, the federal government imposes strict rules and limitations on enrolling, making changes, or using these accounts. You should consult your tax advisor or the IRS for guidance on how cafeteria plans might affect your personal tax status. Please use careful consideration in making your decision whether to enroll or not, and if you do, how much you should contribute. 

Premium Only Plan (POP)
Health Care Flexible Spending Account (HCFSA)
Dependent Care Flexible Spending Account (DCFSA) 
Effects on Taxes and Other Considerations
Termination of Coverage

ASI administers the Health Care Flexible Spending Account (HCFSA) and Dependent Care Flexible Spending Account (DCFSA). For more details on qualified expenses and how these accounts work, please refer to the ASI website at www.asiflex.com.

Premium Only Plan (POP)

• Once you elect to participate in the POP, your enrollment will continue from plan year to plan year. Changes to your POP election may be made only during open enrollment .
• The POP allows your monthly medical and dental insurance premiums to be deducted from your paycheck before taxes are calculated.
• HR requires proper documentation for SGDPs and their dependents in order to deduct the relevant portions of their premium pre-tax.
• If you have children or relatives who do not qualify as federal tax dependents, their premiums are not eligible for the POP and you may incur imputed income.
  

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Health Care Flexible Spending Account (HCFSA)

• The HCFSA allows you to cover certain eligible out-of-pocket medical, dental and vision expenses not covered or reimbursed by insurance and incurred by you or your federal tax dependents.
• You may contribute pre-tax, a minimum of $10 per month up to $6,000 each plan year. Your payroll deduction will be calculated as your annual election divided by the number of remaining pay periods in the plan year (July-June).
• Enrollment in a medical and/or dental plan is not required for you and/or your federal tax dependents to participate in the HCFSA.
• You cannot make contributions to both an HCFSA and a Health Savings Account (HSA). You may not use this account to reimburse insurance premiums.
• Expenses qualify for the HCFSA when they are incurred, not when they are paid.
• You must re-elect the HCFSA every plan year to continue participation.

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Dependent Care Flexible Spending Account (DCFSA)

• This account allows you to pay for the cost of caring for your federal tax dependents so you (and your spouse if you are married) can work. This is NOT for your dependent spouse's or children's healthcare expenses.
• You may contribute pre-tax, a minimum of $10 per month and up to $5,000 ($2,500 if you are married and file your taxes separately). Your payroll deduction will be calculated as your annual election divided by the number of remaining pay periods in the plan year (July-June).
• Your contribution is for the plan year. However, for tax purposes you are responsible for keeping track of your total calendar year contributions, including any contributions made by your spouse.
• Federal tax dependents, for the purpose of the DCFSA, include any qualifying child or relative who is under the age of 13, your spouse, and older dependents who are mentally or physically incapable of self-care and who live in your home at least eight hours each day. If you are divorced, the dependent must be your son or daughter for whom you have more than 50 percent physical custody.
• Qualifying providers can provide care in your home or outside your home. Care provided outside your home and in a facility caring for more than five individuals must be licensed by the state.
• Expenses may not be paid to your spouse, to any of your children who are under the age of 19 at the end of the year in which the expenses are incurred, or to any other individuals for whom you or your spouse are entitled to a personal tax exemption as a dependent.
• Dependent daycare expenses are incurred when the day care is provided. You must receive the dependent daycare services before you file a claim for those services.
• You must re-elect the DCFSA every plan year to continue participation.

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Effects on Taxes and Other Considerations

Be sure to consider the following effects cafeteria plans may have on your taxes:

• Cafeteria plan dollars are deducted from your pay pre-tax, meaning before federal, state, FICA (Social Security), and Medicare taxes are paid. Your taxable income is reduced by the amount you contribute.
• Participating in cafeteria plans reduces the salary on which annual contributions to Social Security are calculated, which may result in a reduction of the Social Security benefits received at retirement.
• Reimbursements from your DCFSA may reduce or eliminate dependent care tax credits on your federal income tax return. For most people, DCFSA reimbursements provide a greater benefit, but everyone's tax situation is different, so it is best to compare tax savings on an individual basis.

Other Considerations

Separate Choices and Accounts
The POP, HCFSA, and DCFSA are three separate choices. You may NOT use your HCFSA contributions to reimburse yourself for dependent daycare expenses or vice versa, even if you have excess contributions in one account and a shortage in the other.

Using Contributions
Your spending accounts CAN ONLY BE USED to reimburse eligible expenses incurred during the effective period of the plan year for which you enroll. You CANNOT roll over any amount not used in your account. You have until September 15th of the following plan year to incur expenses and until November 15th of the following plan year to file a claim for reimbursement of eligible expenses.

Irrevocable Elections
Your elections under these plans ARE IRREVOCABLE during the plan year except as specified by IRC rules.

Unused Balances
It is important that you review your previous year's expenses and carefully plan your election amount for each account. If you do not incur eligible expenses equal to your contributions, the IRC requires that the unused portion of your account balance be forfeited.

Health Savings Accounts (HSA) 
UPI does not offer an HSA account; however, if you want to participate in an HSA, you must directly contact a financial institution to establish an HSA account and you must enroll in a qualified high-deductible health plan (HDHP). UPI offers an HDHP. In general an HSA allows you to set aside funds in a bank account to help offset health related expenses and receive a credit on your annual income tax return. Any remaining balance can be carried forward and used in upcoming years. Additional rules and restrictions apply so HR encourages you to review the HSA information available in the tools and resources section and consult with your financial or tax advisor prior to making your decision to enroll.

Note: If you enroll in an HSA, you are not eligible to participate in the UPI's Health Care Flexible Spending Account.

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Termination of Coverage 

• Your participation will end when you terminate employment with the University Physicians, Inc. This means you will no longer be able to make contributions to the plan, unless you elect COBRA.
• Expenses incurred while you are not a participant (e.g. on leave without pay) will not qualify for reimbursement unless you are on approved Family Medical Leave Act (FMLA) leave.
• If you return to work within 30 days during the same plan year, your participation will be reinstated. You will have the option of reinstating your coverage at the same plan year level you had prior to your termination, or reinstating your coverage at the same monthly amount with a reduced plan-year amount. Should you choose the same plan-year amount, your per-pay-period contributions will be adjusted so that your total contributions for the plan year will equal your annual coverage amount. Contact HR when you return to work.
• If you return to work after 31 days during the same plan year, you may make a new election for the remainder of the plan year.
• If you terminate participation in the plan prior to the end of the plan year, you are not eligible to submit expenses for reimbursement after your termination date, regardless of the balance in your account.

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