The City of New York offers its employees a Flexible Spending Accounts (FSA) Program, which is allowable under Internal Revenue Code (IRC) Section 125. The Program allows City employees to deposit a portion of their pre-tax income into accounts maintained for certain health and dependent care expenses.
Health Care Flexible Spending Account (HCFSA) can help pay for out-of-pocket medical expenses, while reducing your taxable income. In order to participate, employees must put in a minimum of $260 up to a maximum of $5000 in their accounts. IRS regulations state Use it or Lose it. You should estimate conservatively, calculate out of pocket expenses not covered by health insurance. Re-enrollment is required each year during the annual Open Enrollment Period.
Dependent Care Assistance Program (DeCAP) can help pay for expenses to care for your children or other dependents, while reducing your taxable income. Pay no federal taxes up to $5,000 on eligible dependent care expenses. In order to participate, employees must put in a minimum of $260 and a maximum of $5,000 per year. If you are using the Dependent Care account make sure the facility is an authorized center. Re-enrollment is required each year during the annual Open Enrollment Period.
Medical Spending Conversion (MSC) Health Benefits Buy-Out Waiver Program
The Health Benefits Buy-Out Waiver Program allows eligible employees who can obtain non-City group health benefits to waive their New York City health benefits in return for an annual cash incentive payment of up to $1,000.
Medical Spending Conversion (MSC) Premium Conversion Program
The Medical Spending Premium Conversion Program enables eligible employees to pay for their health plan premium deductions on a pre-tax basis, thereby reducing their gross income for tax purposes. Currently, health plan deductions for basic and/or optional benefits are deducted from your salary. For tax purposes, payments made on a before-tax basis effectively reduce the salary on which your taxes are computed by the amount of the health plan deduction. Therefore, federal and Social Security taxes that must be withheld are reduced. The net effect will be that you receive more money in your paycheck.
For more information or to obtain enrollment forms please visit the FSA (Flexible Spending Accounts) Website at www.nyc.gov/olr or call the FSA Administrative Office’s automated helpline at 212-306-7760 to receive a form by regular mail.