Conference 7.286::digital

    Another HCRA question. I opt out here, but maintain an HCRA for myself
    and my husband. Next year, for the first time, his company is also 
    offering the HCRA accounts. Does anyone know how the IRS regulations
    work? Are we limited to either single accounts at each company or
    one family account, or can we maintain family accounts at both places 
    (like dual medical coverage)? Of course, that would mean that a bill 
    would only be submitted to either one or the other (must submit
    originals), but we have some high, non-covered medical expenses and 
    every little bit helps.
    
    Linda

    re: .2
    
    Have you considered asking HR? They're supposed to know this kind of
    thing. If not them, perhaps an accountant could help.

    re. 3
    
    RIGHT! 8^)

    re.2 Yes, you both can have accounts as long as you don't try to
    send the same claim in to both. You can deduct $40 per week for HCRA
    from Digital. If you want to give me a call about your situation maybe
    we can find a different option that would be better for you. If your
    already spending $2080 (max. HCRA amount) plus deductions and you are
    looking for more out of pocket money thats a lot of money out of pocket
    given that the max out of pockets under Hancock $1800, ($3600) and $5400.
    
                                 John    223-5402
                                         

>    <<< Note 2182.0 by SAHQ::LUBER "Home of 1992 Western Division Champs" >>>
>               -< Question of Healthcare Reimbursement Account >-
>
>    I am opting out of the medical plan in 93, but will remain on the
>    dental plan.  Does anyone know if I can keep a Healthcare Reimbursement
>    Account at Digital to cover dental expenses not covered by the dental
>    plan?

    
    The minimum weekly deposit to a HCRA is $10, or $520 for the year. This 
    means that you are expecting to have dental expenses of $520 beyond what 
    the dental plan covers. If you're sure you're going to spend that much
    on dental, then go for it. 


    But remember, WHAT YOU DON'T USE, YOU LOSE!

    --- Paul

>    The minimum weekly deposit to a HCRA is $10, or $520 for the year. 

	Not true. My current HCRA deduction is $7/week.


	Question, can funds from a persons HCRA be used to pay
	bills for one of that person's dependents?

					Tom_K

>	Question, can funds from a persons HCRA be used to pay
>	bills for one of that person's dependents?

    Yes, I have an HCRA and have been reimbursed for my child's and wife's
    expenses.

--Steve

    The HCRA minimum is $5 per week.
    
    Employees can be reimbursed through their individual HCRA's for
    eligible expenses they incur and for expenses incurred by a spouse or
    any dependent they claim on their Federal income tax return.

Can the HCRA be used to pay for disposable contact lenses?

   Gary

Gary,

HCRA certainly will pay for prescription glasses and contacts, so if these are
prescription disposable contact lenses then I'd take the reimbursement. 

The benefits book has a list of some things not acceptable, I'd look there.
You can call JH to get information about what is acceptable.

Also, you can get money back for travel (at $.09 per mile) for car expenses
to and from Dr appointments and the like.

dave 

>>Can the HCRA be used to pay for disposable contact lenses?

I have been doing it for the last year and have not had any problems
getting reimbursed.


Greg

    someone help me if I'm not clear on this:  DEC does NOT pay for
    presciptive eyewear (glasses,contacts,etc) unless on works in an
    environment that requires safety eyewear (and the one has to pick from
    a limited rather outdated and cheap looking selection).
    
    BUT- one can reimburse themselves for the eyewear they buy throughout
    the year from HRCA?
    
    WHY???? Why would one want to let someone else hold on to money for
    something they plan on buying (in most cases, accidental breakage not
    taken into account as I feel it doesn't happen that much)?  If I was
    planning on buying new glasses (and I am as well as my son) I would set
    aside x-amount of dollars in my own account and buy them when I had
    enough to do it.
    
    I guess I can see the point where someone has put too-much-x dollars
    into HCRA and are going to lose it, then I, too, would find some way of
    spending it as fast as I could before it was gone.
    
    (BTW: we do the same thing for dental bills)
    
    Ogre.

    The last reply has missed the point of an HCRA. The reason you put it
    in an HCRA instead of your account is that the HCRA money is pre-tax.
    The money you put in your own account is after-tax. Depending on your
    tax bracket there can be a big difference. The HCRA money is not
    considered income and is not taxed. 

Why get glasses reiumbursed?

Because of the savings in taxes one gets from the HCRA. As far as what can
be reimbursed from HCRA depend entirely on the tax code, as I understand
it (proper disclaimer :-) ) 

HRCA allow people, who do not have major medical problems (and therefore can
take deductions off the 1040), to get some benefit.

dave

	Also, I believe that you have access to all of the money
	right from the start of the year. For example, if I choose
	to put $10/week in an HCRA, (total of $520/year), and in the	
	first week of January I incurred a $500 bill that was 
	reimbursable by the HCRA, it is my understanding that could 
	put in for it right away, even though I only have $7 put in so far.
	Of course, I won't see the money right away, as they send
	checks only a few times a year...

					Tom_K

    Can you use this account for braces?
    
    Brad.

    re: .16
    
    Correct, you have access to the entire amount you've signed up for
    immediately.  And, you'll see it pretty quick - checks do go out "a few
    times a year" - 12, to be exact, mailed on the 9th of each month.
    
    HCRA is a good deal if properly understood and used.  Looks like
    several folks in here ought to investigate it further - it can save you
    $$$ in taxes (both federal AND state, I believe, at least in MA).
    
    Dick.

    re: .17
    
    Yep, orthodontal work is an allowable deduction by the IRS, thus 
    reimbursable via HCRA.  Cuts the cost down quite a bit with those 
    pre-tax $$$, too!
    
    Dick.

    re .17
    
    Yes, and this year I took the max ($40 a week out) and it still didn't
    cover all of my out of pocket expenses for braces.  One of the things
    you should do is visit your dentist/orthodondist in November to figure
    out what your braces expense will be for the following year.  You may
    be able to split the expenses over two years so that you can cover the
    total expense without going over the maximum of $40 a week.
    

You can only sign up once a year during open enrollment. 

re Note 2182.17 by ESOA12::SMITHB:

>     Can you use this account for braces?
  
        An HCRA can pay for anything that would be an eligible
        medical expense for income tax deduction purposes -- get the
        table from the income tax instructions (I believe the HR
        people have them as well).

        Some eligible expenses may not be obviously medical: 
        special schooling for learning disabilities may be covered
        by HCRA.  (My daughter had such special schooling;  I had to
        write a letter to the JH administrators pointing out the IRS
        regulation, and it was covered.)

        Bob

    Question....
    
    Does anyone know what happens with your Health Care Reimbursement
    account if you get layed off?  Say I sign up for HCRA which starts 
    in January, I get layed off in March, but used the money from HCRA
    to pay off a medical expense which was more than I've put into the 
    HCRA account to date.  
    
    Just curious since open enrollment is coming up soon, and nobody 
    knows if they're job is secure anymore.
    
    Debbi

    Okay, I see how it can be beneficial HRCA can be, but it is STILL
    taxable, no?  what is the tax rate on funds when they are withdrawn?
    How does this differ from after tax money in x-account?
    
    Ogre.
    
    

    re: .24
    
    The whole point is that the money is NOT taxable!
    
    Bob

    what's the percentage taxable for IRS purposes? I suppose it's only
    noticeable if one owns a home?  this money has to be claimed somewhere?
    and someone has to be getting their fair shake of the funds.
    
    Plus, doesn't someone collect interest on this money as it just sits
    idle?
    
    Ogre.

    In regards to the question about what happens should you get laid off
    and you have received more than you put in, I believe the answer is -
    
    YOU WIN BIGTIME. That is supposedly paid for by the folks who don't use
    it and lose it.

I'll try to explain the tax advantage of an HCRA.

Even if you don't have an HCRA, medical expenses are tax deductable.
The problem is that only those expenses that exceed 7.5% of your
adjusted gross income are deductable.  Say your AGI is $50,000.
That means the first $3,750 of your medical expenses are not deductable.
Your HCRA funds are pre-tax.  That means that they get subtracted from
your gross pay *before* taxes are calculated.  You effectively get
the tax deduction without having to meet that 7.5% limit.

    okay the last (?) big question is:  one definitely does pay less in
    taxes using HCRA?
    
    smaller questions: pay in jan 1 to dec 31?  when must account be empty
    of funds to avoid losing any money?
    
    Also, can this be used to reimburse yourself for co-pay(ments) to Dr's
    office and prescriptions?
    
    sounds like a good plan, now to only figure out how much my family
    would require extra.
    
    Sorry if this has all been hashed out before, sometimes it's good to
    revisit things and always good to talk things out.
    
    Ogre.

>    okay the last (?) big question is:  one definitely does pay less in
>    taxes using HCRA?

	Right. Really, the only way I can see losing is if you don't 
	use the money...
    
>    smaller questions: pay in jan 1 to dec 31?  when must account be empty
>    of funds to avoid losing any money?

	You have to spend it within the year it was deducted. You do get a 
	couple extra months to file the claim, though

>   Also, can this be used to reimburse yourself for co-pay(ments) to Dr's
>   office and prescriptions?

	Yup.


					Tom_K

    You have until the end of March to submit expenses incurred in the
    previous year.

    Also, you can use it more mileage to/from doctor's office, eyeglasses,
    etc.

    BTW, JH makes no attempt to validate the submittals as valid.  It's
    between you and Uncle Sam.

    L.

    okay, I lied; _one_ more:  do you have submit for reimbursement after
    every dr visit, etc _OR_ can you submit every month, 4, 6, 12?
    
    Ogre.

    re .32
    
    You can batch 'em up.  I've been doing that for the last year and it
    works fine.
    
    /Butch

    
    Another item with regards to the effect on taxes.  The money you
    contribute to HCRA is subtracted before they calculate your FICA(both
    parts) taxes also.  When you itemize your deductions(above 7.5%) that
    is still subject to both state and FICA taxes.  The HCRA comes right
    off the top.
    
    -Steve
    

>                        When you itemize your deductions(above 7.5%) that
>    is still subject to both state and FICA taxes.

Depends on the state.

About the "get a check for $520 in january when you've only put in $10" thing 
-- my experience (with a previous company) is that you file a claim for $500 
and it registers on your account, but you only collect the money after you have 
put it in.  You would get a check once a month for the money withheld in the 
previous month.

FWIW

    re: .36
    
    Wrong.  You have immediate access to the amount you have signed up to
    put in for the year, as of the first day of the year.  Thus, if you
    sign up for $10/week, and incur (and submit) an eligible expense of
    $520 for the month of January, you get a check for $520 mailed on
    February 9th.  You then pay the $10 per week into the account for the
    rest of the year.
    
    I can't speak to how other company plans might work.  BTW, this is all
    explained in "Your Benefits Book".  There's a lot of info available for
    those willing to read the manual.  8-).
    
    Dick.

I think the confusion here is due to the fact that this is not the manner in
which the DCRA functions.

The DCRA only pays up to the amount you have accumulated in the account at the
time you submit the claim.  Generally, I've found the JH will lag about 1 week
in terms of processing payroll deductions (that is, while the check may get
cut on the 9th or 10th of the month, the pay period contribution immediately
prior to that date is not usually "available" - depending on when payday
happens, they might be 2 contributions behind); this is not a problem since
un-reimbursed expenses are rolled forward automatically.

--Scott

So what *does* happen if you leave the company after being reimbursed for more 
than you contributed?

Mark

re .-1:

You win.

Someone claimed (I believe in this conference) that you can drop HCRA
deductions after you've exhausted your account.  Of course, that would
be very sleazy.

    re: .40
    
    You can only change your HCRA contribution during the annual open
    enrollment, so you cannot "drop" your contributions after exhausting
    the amount of your account.  You're in it for the whole year.  Of 
    course, if you quit or TFSO, you can stop contributions.  8-).  Not 
    sure about SERP.  Anyone?
    
    Dick.

re Note 2182.41 by GIAMEM::MUMFORD:

>     You can only change your HCRA contribution during the annual open
>     enrollment, so you cannot "drop" your contributions after exhausting
>     the amount of your account.  You're in it for the whole year.  Of 
>     course, if you quit or TFSO, you can stop contributions.  8-).  Not 
>     sure about SERP.  Anyone?
  
        I had heard from several sources that the one change you can
        make at any time is to reduce your contribution to zero.

        I do not know whether this affects your ability to draw on
        the account (assuming a positive balance exists, for
        example).  I am in such a situation where I will probably not
        spend the full amount I elected to set aside this year, and
        it is tempting to choose the "reduce to zero" option, but I
        don't know if I would lose the ability to draw on the money
        that I have already contributed.

        Bob

    From pp 5.5 of 1991 edition YOUR BENEFITS BOOK

    You cannot change your contributions to your Health Care
    Reimbursement Account other than during the annual open
    enrollment period.  However, you can stop your payroll
    deductions at anytime during the year.  If you do this,
    you will only be able to submit claims for eligible health
    care expenses that you incurred during the benefit period and
    PRIOR to the date you stop your participation.  In addition,
    you CANNOT enroll again until the next open enrollment
    period.

    re: .43 by RTL::LINDQUIST
    
    I stand corrected.  I interpreted "change" to include "stop".  Perhaps
    I should go RTFBB again myself (very clever).
    
    8-).

    	For those with automatic HCRA payments:
    
    	I just found out that Dental claim amounts which are not covered
    due to code FL (frequency for procedure limited) are not automatically
    paid from your HCRA. 
    
    	A separate HCRA claim must be filed using a HCRA/ DCRA (magenta
    colored) form after the dental claim is denied.
    
    Phil

    
    While this is a very old note string, I've recently had some HCRA 
    experiences that might help others:
    
    o RE: -1, I just had a dental item that was not covered, but it had
      another code (CX).  I did not automatically get reimbursed; when I
      called to discuss, they said that I need to mail in the standard
      claim form with the receipt data in it.
    
    o If you ever stop contributions to your HCRA during the year, for
      example because you're not going to need to use the all the $ in the HCRA
      that you thought you would, you could have a problem.
    
      Twice in past years, I've stopped my contribution mid-way through
      the year.  Both times, I've continued to submit claims because
      I had unused $ still in the HCRA. 
    
      Both years, any subsequent claims were denied *because* they saw
      the flag that I was not contributing to the HCRA.  The first year,
      I was so amazed that I didn't do anything about it and lost the
      reimbursement.  The 2nd year, I did something about it - I called
      and worked through it with them and they recognized their error,
      and I got the $ back.  
    
    o Also - I learned yesterday that starting in 1996, employees
      contributing to an HCRA will *not* be able to stop contributions
      during the year.  I was told the IRS has pushed this rule onto
      Digital.  So be careful in planning your 1996 contibution to not be
      too overly generous...
    
    
    FWIW,
    
    	-John

I was wondering when the IRS was going to finally close the loophole of allowing
deductions to be stopped mid-year....  As the instructions for HCRA/DCRA say,
plan ahead!  It's best to under-contribute than over-contribute.

				Steve

    Why is this a loophole?  Seems to me it helps deal with the
    situation of it being hard to know exactly what amount you
    need to contribute in advance?
    

    By using the loophole about stopping deductions in the right fashion, 
    you could actually be reimbursed for more than you put in.
    
    	Dave

It's a loophole because the system was set up with the intent that you commit
the money in advance in exchange for it being non-taxable.

There's a mechanism in place should you withdraw more than you contribute
(say, for example, if you leave your job before the end of the year).  I don't
recall exactly what it is...

				Steve

    
    The insurance company should knows how much we have contributed
    anytime.  If we are not allowed to stop the contribution, who
    can estimate how much we need for the coming year.  This HCRA
    idea is very strange.    I don't know who designed this law.
    I don't see any relationship between 'commit the money in advance'
    and 'being non-taxable'.  
    
    Why don't they just let us deduct from 1040.
    
    Jason

    re: -1
     
    You can just deduct from 1040, but you must spend over some percent of
    your salary before it qualifies as a deduction.  HCRA allows you the
    tax break, but you take the risk of overcommiting your needs.
    
    This allows you to prepare for medical expenses and the IRA cuts you
    some slack for your preparation.
    
    I least that's what I think.
    
    JW

    I read a suggestion in some financial magazine that, if you find
    you're near the end of the year and you'll have money leftover in
    the account, toddle out and buy an extra pair of glasses, refill
    prescriptions, etc. before the deadline.
    

    Does this also hold true for the DCRA?  I can now stop DCRA at any time
    during the year.  My sitter took 6 weeks of leave to have a baby and 
    I took lots of vacation during this time.  
    This year, I will probably stop DCRA payments DEC 1.  Will this new law
    make that impossible next year?
    
    Lisa

I think so, yes, but I don't have the bulletin in front of me.

			Steve

    
    RE: .53
    
    Buying glasses is our family's primary use of HCRA.  I don't/can't
    predict I will get sick and need HCRA next year.
    
    Again my question is how can you plan ahead for your medical
    need in next year.  Other than you are already sick now.
    
    Jason

    
    	The HCRA can also be utilized for dental care, cosmetic surgery,
    and psychatric treatment.
    
    	We use our HCRA to supplement two of the three above. Depending
    on your mood today, you do the picking ;-)
    
    		the Greyhawk

Given the rules as they are, you fund your HCRA to the minimum amount you
expect to spend.  For me, this includes regularly scheduled dental and eye
exams and contact lens refills - costs I can predict fairly well (though with
the dental reimbursement schedule changing in '96, that may be tough for this
coming year.)  If there are unexpected expenses not covered by your medical
coverage, and you don't have enough in the HCRA to cover it, then you pay the
taxes on the difference.

HCRA and DCRA are related, in the eyes of Congress, to so-called "cafeteria"
benefit plans where there is a defined contribution each year.  Sure, it would
be great if there were fewer restrictions, but at this point I'm glad to have
the program at all.

					Steve

    <<Again my question is how can you plan ahead for your medical
      need in next year.>>
    
    When you reach a more advanced age, such as mine, you no longer have to
    predict that you will have medical expenses... they just happen...
    and you don't have to be sick already to know that something will go
    wrong next year just as it did last year and the year before that.
    
    Deductibles and uncovered dental charges are pretty safe bets to plan
    on each year even if you're not as old as GRANPA::JWOOD.
    

    
    I've never tried milage reimbursement on the HCRA but decided to start.
    
    Reply .11 says its 9 cents a mile.  Is this correct?  I thought
    the IRS milage numbers were more generous than the Digital rate of
    22.5 cents a mile.
    
    -John

There are at least two IRS mileage numbers.  If you accrue miles while providing
volunteer service to a charitable organization, the rate is lower than for
business expenses.

I think the actual rates are $.09 for medical mileage and $.12 for volunteer 
mileage.

    re; .-1, .-2
    
    thanks for the updated info. -j