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Benefits News: Important Update to Healthcare Flexible Spending Accounts (FSAs)

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Dec 11 2013
The Healthcare Flexible Spending Account (FSA) allows you to set aside pre-tax money to reimburse yourself for eligible medical, dental, prescription drug and vision expenses. 

We are pleased to inform you about an enhancement to Columbia's Healthcare FSA, beginning immediately.  As permitted by recent guidance from the Internal Revenue Service (IRS), we are changing our Healthcare FSA  to allow you to roll over up to $500 in unused  funds remaining in your account at the end of the calendar year.  Please note that, per IRS rules, this change applies only to the Healthcare FSA and does not apply to the Dependent Care FSA. 

Under the current plan provisions and per IRS rules, any funds remaining in your Healthcare FSA at the end of the calendar year are forfeited.  The new roll-over will reduce the likelihood that you will forfeit Healthcare FSA funds.  However, the IRS still requires fund balances in excess of $500 be forfeited. 

Because plan participants have until March 31 to file HCFSA claims incurred during the prior calendar year, the roll-over occurs on April 1.  In other words, on April 1, a Healthcare FSA balance of up to $500 from the previous calendar year will be rolled over and added to the balance of the current year's Healthcare FSA. 

  • If you currently have a Healthcare FSA, no action is needed to roll over up to $500 from 2013 to 2014. Any balance up to $500 at the end of 2013 will automatically roll over and be added to your 2014 Healthcare FSA account.
  • Any 2013 balance in excess of $500 will be forfeited, so be sure to use your account balance above $500 for eligible expenses between now and December 31, 2013.
  • If you have a 2013 Healthcare FSA balance and you did not elect a Healthcare FSA for 2014, we will automatically establish a 2014 Healthcare FSA for you, and your 2013 fund balance up to $500 will roll over to your 2014 account.
  • Please remember that you have until March 31, 2014 to request reimbursement from your Healthcare FSA for eligible healthcare claims incurred in 2013. If you deplete the balance of your 2013 account, no roll-over will be necessary.

Special Enrollment Opportunity

Due to the introduction of the roll-over provision, we are allowing employees to change their 2014 Healthcare FSA elections or newly elect a 2014 Healthcare FSA at this time.  If you wish to change your 2014 election or newly elect a Healthcare FSA, please send an email to the Columbia Benefits Service Center at hrbenefits@columbia.edu on or before December 30, 2013.  Please note that you cannot process a change to your 2014 Healthcare FSA via the Benefits Enrollment System and you must contact the Columbia Benefits Service Center to process your change.  In addition, we are not able to honor any changes after December 30, 2013.

The IRS does not permit individuals to have both a Healthcare Flexible Savings Account and a Health Savings Account (HSA) during the same calendar year.  Therefore, if you have a 2013 Healthcare FSA and you elected an HSA for 2014, you will receive an additional email  regarding how your enrollment will be handled.

The following example illustrates how the roll-over provision works.

Healthcare FSA EXAMPLE:  Columbia's  Healthcare FSA operates on a calendar year basis and participants have until March 31 to file claims incurred during the prior calendar year. 

  • An employee has an Healthcare FSA balance of $800 on December 31, 2013
  • The employee's 2014 Healthcare FSA election is $2,500
  • On March 1, 2014, the employee submits a reimbursement claim for $350 that was incurred before December 31, 2013. 
  • The employee's balance is reduced to $450 (the $800 previous balance less the $350 claim).
  • If the employee submits no other  Healthcare FSA claims by March 31, 2014, the $450 2013 balance will roll over to 2014.
  • The employee will then have a $2,950 Healthcare FSA balance (the $2,500 election for 2014 plus the $450 roll-over from 2013).

Further Information

To check your Healthcare FSA balance or download a list of eligible expenses, visit plan administrator EBPA's website, www.ebpabenefits.com. You may also check your balance by phone at 1-888-456-4576.

If you have questions about the Healthcare FSA or the new roll-over provision, please contact the Columbia Benefits Service Center at 212-851-7000, Monday through Friday, 9 a.m. to 4 p.m.  You may also email us at hrbenefits@columbia.edu.