Health Care Spending Accounts that are provided on a stand-alone basis are funded entirely by the employer. Each member of a class receives an equal allocation of funds from the employer. HCSA which forms part of a flexible benefits plan can be funded by both employer and employee contributions. Employee contributions are funded by “flex credits” rather than direct deposits. In the later case, employee contributions would have to be deducted from payroll on an after-tax basis, thus eliminating any tax advantage of having a HCSA.
The employee and their covered dependents use the HCSA to reimbursed eligible medical expenses,not covered by the employee or the spouse’s plan.The HCSA balance is reduced by the amount of each reimbursement.
Payments continue to be made until the account balance is zero. At the end of the year, any unused balance in the account can be carried over for one year, but unused funds in the account for more than two years are forfeited to the employer. Alternatively, unclaimed expenses for a given year can be carried forward for a year.
However, a plan can not include both a carry-over of the account balance and unclaimed expenses.
If you have any further questions, you can contact on Health Spending Accounts and how it can be implemented as part of your Employee Benefits, please contact us.