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Health Care Reimbursement Account (HCRA)

A Health Care Reimbursement Account (HCRA) allows you to set aside before-tax money out of each paycheck so you can pay yourself back for certain health care expenses.

Although your health plan benefits will cover a large part of your health care expenses, you may have bills for health care services that you’ll have to pay for out of your own pocket. These might include medical and dental deductibles, copayments, vision care costs, and other expenses that your health plan does not cover. When you participate in the HCRA, you can set aside before-tax money to reimburse yourself for these eligible health care expenses.

The Health Care Reimbursement Account is not currently available to County of Orange Superior Court employees, or County of Orange retirees.

You may contribute up to $2,500 to your HCRA each year.  The tax free funds in your account can be used to reimburse you for eligible out-of-pocket health care expenses incurred by you and your family.  Eligible health care expenses include:

  • Deductibles, co-payments, and other amounts you pay out of your own pocket to cover health care expenses
  • Medical, dental, vision, and prescription drug expenses that are not covered or are only partially covered by your health plans.
  • Over-the-counter medications are not covered unless prescribed by a physician.

Expenses That Are Not Eligible

The following are examples of expenses not eligible for reimbursement through HCRA, as determined by the IRS.

  • Insurance premiums
  • Expenses associated with long-term care
  • Expenses incurred prior to your enrollment in HCRA or after your participation ended

For a list of eligible and ineligible expenses, contact your tax advisor, call the IRS at1-800-829-3676, or visit the IRS Web Site at www.irs.gov.

Things to Consider before Enrolling in a HCRA or a DCRA

Before participating in a HCRA or a DCRA, you need to carefully estimate the expenses you’re likely to incur and consider whether those expenses are eligible for reimbursement. To help you plan, consider these questions:

  • What were your out-of-pocket costs for health care and dependent care this year?
  • What do you expect your out-of-pocket health care and dependent care expenses to be
    next year?
  • Are you expecting a baby? If so, estimate your day care expenses and consider whether DCRA or the dependent care tax credit makes the most sense for you.
  • Are you expecting any health-care expenses that are not totally covered by your benefits (e.g., orthodontia)?
  • Does your spouse have a HCRA or DCRA available through his or her employer? If so, how do you want to coordinate your accounts?
  • Do you have other eligible dependents for whom you want to use the HCRA or DCRA?

If you are estimating dependent care expenses during a year when your child turns 13, be sure to consider the impact this will have on your annual calculation.

Determining Your HCRA and DCRA Contributions

You can use the HCRA/DCRA Reimbursement Calculator Tool located on the Benefits Center web site to help estimate your and your dependents’ expenses for the coming year. You may want to review your bills and checkbook register for the previous 12 months as you estimate your upcoming expenses.

Remember to estimate conservatively – the IRS requires that you forfeit any amounts left in your accounts after the claim-filing deadline. In addition, you cannot change the amount you elect unless you experience a Qualified Life Event.

How to File HCRA and DCRA Reimbursement Claims

You can obtain reimbursement claim forms:

  • From the Benefits Center Web Site, you can print a claim form or request that one be mailed to you.
  • By calling the Benefits Resource Line at 1-866-325-2345 and requesting a claim form.
  • You’ll need to complete and sign your claim form, attach receipts and documentation of payment (including any Explanation of Benefits statements for HCRA claims), and mail them to the HCRA/DCRA Administrator at the address on the form.

Special Rules

The tax savings available through the HCRA are made possible by Section 125 and Section 105(h) of the Internal Revenue Code. These sections of the tax law also impose some restrictions on these types of accounts.

Use it or lose it
Any money left in your account at the end of the Plan Year, for which you have not incurred an eligible expense, will be forfeited back to the Plan. All claims must be received by March 31 of the following year for expenses incurred during the previous Plan Year.

You cannot carry your account balance over to the next Plan Year
You are not allowed to carry over your account balances from the previous Plan Year to pay for expenses incurred in the following year.

You must incur expenses before you can be reimbursed
In order to receive reimbursement from your HCRA, you must incur an expense, and pay for that expense, before filing a claim for reimbursement. Once you incur an eligible expense, you must fax or mail a Flexible Spending Account Reimbursement Form with SHPS.

You cannot transfer money between accounts
If you also elect participation in the County Dependent Care Reimbursement Account, you cannot transfer funds from your Health Care Reimbursement Account to pay for dependent day care expenses, nor can you use money from the Dependent Care Reimbursement Account to pay health care expenses.

You cannot change your elections during the year
Once you have enrolled and made your HCRA elections, you cannot make changes until the next year’s open enrollment period, unless you have a qualifying change in family or employment status.

IRS Rules:

  • You can’t use HCRA dollars to pay dependent care expenses
  • You can’t use DCRA dollars to pay health care expenses
  • You can’t stop, start, or change your HCRA/DCRA deposits outside Open Enrollment unless you have a qualifying life event such as marriage, birth of a child, divorce, change in spouse’s employment, etc., Change in dependent care provider charges.

Please  consult the Plan Document regarding events that allow you to change your HCRA/DCRA deposits. For more information, obtain a copy of the County’s Section 125 Plan Document which is available on the Benefits Center Web Site or by calling the Benefits Resources Line and speaking with a Benefits Specialist. For additional information, you may also call the IRS at 1-800-828-3676 or visit www.irs.gov

About This Information

This information is intended to give you an overview. Actual benefits are determined under the provisions of the Plan Document. Should any conflicts exist between this website information and the Plan Document, the Plan Document shall prevail. You may view and print the Plan Document by logging onto the Benefits Center Web Site and click on “Review Plan Details” and Section 125 Plan. You will need your Social Security Number and PIN to access the Benefits Center Web Site and Resource Line.