The Health Care Spending Account (HCSA) is a type of Flexible Spending Account (FSA). You can use it to pay for health-related expenses with tax-free dollars. This includes medical, hospital, laboratory, Over-the-Counter drug, prescription drug, dental, vision, and hearing expenses that are not reimbursed by your insurance, or other benefit plans.  

Before enrolling in the HCSA program, you should consider what your eligible expenses might be. Reviewing your costs from previous years can help. Once you have estimated the amount of your costs, you may then decide how much to contribute to your HCSA. Under federal law, any money that you put into your HCSA must be used for expenses incurred during the plan year in which it was contributed. Currently the maximum annual contribution amount allowed is $3,300 and the minimum annual contribution is $100. The maximum contribution may be subject to change annually. HCSA funds are available at the start of the plan year. 

The HCSA is open to New York State (NYS) employees of Executive Branch state agencies, the State University of New York (SUNY), the Legislature, and the Unified Court System. Employees of the Roswell Park Comprehensive Cancer Center, New York State Energy Research and Development Authority (NYSERDA), New York Liquidation Bureau, and Environmental Facilities Corporation (EFC) are also eligible to participate. Employees who wish to enroll in the HCSA must also: 

• Be either permanently employed or expected to be employed for the entire calendar year in which they plan to enroll in the HCSA (employees who work on a semester or school year basis are also eligible)
• Work at least half-time
• Meet the eligibility criteria for enrollment in the New York State Health Insurance Program (NYSHIP) and
• If an Executive Branch employee, be either Management Confidential (M/C) or represented by Civil Service Employees Association (CSEA), Public Employees Federation (PEF), United University Professions (UUP), NYS Correctional Officers and Police Benevolent Association (NYSCOPBA), Council 82, Police Benevolent Association of NYS (PBANYS), District Council 37 (DC-37), or NYS Police Investigators Association (NYSPIA).
• All negotiating units in the Unified Court System are eligible to participate. 

New employees must meet the eligibility criteria to participate in the HCSA. If you enroll during the year as a new employee, your period of coverage will begin on your 31st consecutive calendar day of employment or the date your enrollment is received, whichever is later. You must enroll within 60 calendar days, inclusive, of your hiring date. The plan year contribution amount will then be prorated over the remaining pay periods in the calendar year. Deductions will start with the first payroll date that occurs after you become eligible to submit claims. You will be able to submit claims for eligible expenses incurred on or after that date through December 31 of the plan year in which you are enrolled. 

Who Is Not Eligible To Enroll?

Graduate Student Employees Union (GSEU)-represented, casual, seasonal, session, per diem, fee basis employees, and retirees, are not eligible to participate in the HCSA.

To be eligible, expenses must be for health care received primarily for the prevention or treatment of a physical or mental defect or illness. Out-of-pocket costs are generally eligible if they are not reimbursed by insurance. Regardless of whether the expenses are incurred by you or your eligible dependents, they must be incurred during the plan year or during your period of coverage if you enroll after the plan year begins. An expense is incurred when you or one of your dependents receives the health care service, not when you are billed, charged for, or pay for the service.

To be eligible for reimbursement, a health care expense must be:

• For you or an eligible dependent
• Permitted under the Internal Revenue Code
• Medically necessary
• Not reimbursed by your health insurance or any other benefit plan, nor will you seek reimbursement from such plans

Note: You can only be reimbursed for expenses that are incurred during your period of coverage, which means:

• If you enroll during the open enrollment period and remain on the state payroll for the entire year, your period of coverage is from January 1 to December 31.
• If you enroll during the plan year as a new employee, your period of coverage will begin on your 31st consecutive calendar day of employment or the date your enrollment is received, whichever is later. Your coverage will end on December 31.
• If you enroll during the plan year due to a qualifying life event (QLE), your period of coverage will begin when your QLE application is received. However, it can't take effect before the date of your qualifying event. Your coverage will end on December 31.
• If you enroll during the open enrollment period and experience a mid-year QLE, you will have two separate periods of coverage from which expenses must be incurred and will be reimbursed.

When will I be reimbursed?

You can be reimbursed for your expenses as soon as you or your dependents receive medical services. Once you sign up for the HCSA and decide how much you want to contribute, that total amount is available to you at any time during your period of coverage. You don’t have to wait for the money to build up in your account before you can use it to pay for your eligible health care expenses. 

Saving With The HCSA

By enrolling the HCSA, you will reduce your taxable income for health care expenses you already pay for out-of-pocket by paying for these with whole dollars--before federal, state, and social security taxes are taken from your salary. Contributions to your HCSA will reduce your earned income for purposes of qualifying for the Federal Earned Income Tax Credit. You will realize immediate tax savings in every paycheck. 

We encourage you to use an online tax calculator to estimate the taxes you will save by enrolling in the HCSA. Savings will depend on a number of factors such as your earned income, tax filing status, and the amount of your eligible health care expenses. 

HCSA Carryover

Unused contributions up to the IRS carryover limit will carry over to the next plan year for you to use. During the plan year runout period (January 1-March 31), the previous year funds may still be used for prior year expenses. Any remaining funds up to the IRS limit from the previous year will then carryover into the current plan year's account balance after the runout period end date. During the runout, the new plan year election will be depleted first, then carryover funds will be accessible for reimbursement. For participants who did not re-enroll, carryover funds will be available after the runout period ends. The IRS carryover limit for 2025 into 2026 is $660. 

Whose Expenses Are Eligible for Reimbursement?

You may claim eligible expenses under the HCSA program for the following individuals:

• Yourself
• Your spouse
• Your qualifying child
• Your qualifying relative

An individual is a qualifying child if they:

• Are a U.S. citizen, national, or a resident of the U.S., Mexico, or Canada
• Have a specified family-type relationship to you
• Live in your household for more than half of the tax year
• Are 18 years old or younger (23 years, if a full-time student) at the end of the tax year
• Have not provided more than one-half of their own support during the tax year (and receive more than one half of their support from you during the tax year if a full-time student age 19 through 23 at the end of the tax year)

An individual is a qualifying relative if they:

• Are a U.S. citizen, national, or a resident of the U.S., Mexico, or Canada
• Have a specified family-type relationship to you, are not someone else’s qualifying child, and receive more than one-half of their support from you during the tax year

or                                                    

• If no specified family-type relationship to you exists, are a member of and live in your household (without violating local law) the entire tax year and receive more than one-half of their support from you during the tax year

Note: There is no age requirement for a qualifying child if they are physically or mentally incapable of self-care. An eligible child of divorced parents is treated as a dependent of both, so either or both parents may establish a HCSA to be reimbursed for the child’s health care expenses.

What Types Of Expenses Are Eligible?

Expenses are eligible for reimbursement if they are for medically necessary health care services. The expenses must be incurred during the plan year or during your period of coverage if you enroll after the plan year begins. Examples of eligible expenses under the HCSA are listed below. 

Eligible Medical Expenses

Eligible Dental Expenses

Over-The- Counter Drugs

Over-the-counter (OTC) drug costs are reimbursable through the HCSA as long as the items are used to treat a medical condition or illness. Certain OTC costs such as vitamins and dietary supplements are not reimbursable unless they are recommended by a doctor for a medical condition. General purpose items such as toothpaste and lip balm are not eligible expenses.

Eligible OTC Medicines and Drugs

Requiring Additional Documentation 

The following expenses are eligible only when incurred to treat a diagnosed medical condition. Such expenses require a Letter of Medical Necessity from your physician, containing the medical necessity of the expense, diagnosed condition, onset of condition, and physician’s signature.

Mileage and other transportation expenses are reimbursable if the transportation is primarily for, and essential to, receiving medical care.

Mileage is reimbursable as long as a receipt, statement or bill validating your doctor visit is submitted with your claim requesting mileage reimbursement. The standard mileage rate for use of an automobile to obtain medically necessary health care (as described in IRS Code Section 213) is $0.21 for travel that takes place from 1/1/24 through 12/31/25. To submit your claim for mileage to a health care appointment or pharmacy, calculate the mileage on the actual bill/receipt detailing the following: roundtrip mileage multiplied by $0.21. Make sure to include the name of the health care provider or pharmacy on the claim form.

In addition to mileage reimbursement, you may seek reimbursement for parking and toll fees incurred as a result of travel for your medical appointment. Your claim should include a receipt for the toll and/or parking fee in addition to a bill or receipt from your health care provider validating your doctor’s visit.

To be reimbursed for subway or bus expenses incurred for medical treatment, visit the MTA website and print the page that indicates that the fare for a subway or local bus ride is $2.90. Attach the printout to your claim form, along with a bill or receipt from your health care provider validating your doctor’s visit, in order to have your claim approved.

You may also be reimbursed for transportation expenses (including airline fare) to another city if the trip is primarily for, and essential to, receiving medically necessary health care services. You also may be able to include the cost of lodging not provided in a hospital or similar institution. The amount of lodging cannot be more than $50 per night for each person. Lodging is included for a person for whom transportation expenses are a medical expense because that person is traveling with the dependent receiving the medical care. For example, if a parent is traveling with a sick child, up to $100 per night can be included as a medical expense for lodging. Meals are not included.

You cannot include a trip or vacation taken merely for a change in environment, improvement of morale, or a general improvement of health, even if you make a trip on the advice of a doctor, as a medical expense.

You must enroll during the open enrollment period if you would like to contribute to an HCSA. Once enrolled in the HCSA, you may not change your mind. Your pre-tax deductions will continue throughout the plan year. However, if you experience a qualifying life event (QLE) during the plan year, you may be permitted to enroll or change your contribution amount, if it is consistent with the event. 

The effective date of your new period of coverage and your new election amount will be the date your application is received or the date of your QLE, whichever is later. If you are enrolled in the HCSA when the plan year begins on January 1 and you submit a QLE application during the plan year, you will have two separate periods of coverage from which expenses must be incurred and will be reimbursed. If you enroll in the HCSA during the plan year as a new employee, your period of coverage will begin on your 31st calendar day of employment or the date your application is received. The plan year contribution amount will then be prorated over the remaining pay periods in the calendar day. Deductions will start with the first payroll date that occurs after you become eligible to submit claims. 

If you experience a QLE during the plan year, you must submit a QLE application within 60 calendar days of the event, but as soon as possible to prevent unwanted, non-refundable deductions. QLE and New Hire applications will be accepted during the plan year until October 31 for events that occur on or before October 31. Applications submitted after that date cannot be processed in time for the last deduction of the year.  

To Submit a QLE or New Hire Application: 

1. Log into or register your Bentek account
2. From Employee Home, click on Life Events 
3. Click on (+) Life Events, then select the applicable event from the drop down and follow instructions to submit your event 

Qualifying life event applications will be processed within 10-14 business days. No additional documentation or verification of the event is required. You can disregard this message in Bentek. It is your responsibility to keep legal documentation of the changes in your personal records in case the Internal Revenue Service (IRS) audits you. You will receive notice from Bentek that your 2025 FSA election(s) have been updated. Your updated enrollment information will be available in your TASC account the Tuesday after your election(s) have been updated. 

Leave Without Pay or Termination

If you leave the payroll due to termination of employment, leave without pay, or any other reason, your deductions will automatically stop and your HCSA coverage will end. You will still be able to submit claims for expenses that occur on or before the last day of the month of your final paycheck deduction. Any health care services that are received after your contributions stop will not be reimbursed. However, under certain circumstances you may still participate in the HCSA after you leave the payroll:

• If you are eligible to continue your HCSA coverage, you can make after-tax payments directly to the FSA administrator. However, under the direct pay option you won't save money on your taxes. If you leave the payroll during the during the plan year and want to continue your coverage, the FSA administrator will send you a notice to elect continuation of coverage that you must sign and return by the specified deadline. 
• If you return to the payroll during the same plan year, you can re-enroll if you submit a qualifying life event (QLE) application within 60 calendar days of your return to the payroll. QLE applications will be accepted during the plan year until October 31. 
• If you leave and return to the payroll, you may re-enroll, but only for the same election amount that you had at the time you left the payroll. You will have two separate periods of coverage from which expenses can be incurred and reimbursed. You will not be reimbursed for health care services received during the time period when you were not contributing to your account. 

Leave With Pay

Payroll deductions will continue for participants on sick leave, sick leave at half-pay, and vacation provided there are sufficient funds in the paycheck. Deductions will not continue for employees receiving short- or long-term disability benefits through the Income Protection Plan (IPP). Some situations may be considered eligible qualifying life events. 

If you have a question about your situation, contact the FSA administrator at 800-358-7202.

When you receive your W-2, the salary reported in Box 1 will already be reduced to reflect your HCSA contributions. You are not required to file any tax forms to report your HCSA contributions.

Please consult your tax preparer, tax attorney, or accountant if you have any questions regarding your filing requirements. 

Does the HCSA replace my medical plan?

No. This program offers you a way to pay for eligible out-of-pocket health care costs with pre-tax money. You cannot submit expenses for which you have received or will seek reimbursement from your health care plan or other source. You should first submit your claims to your health insurance plan. Once you know how much of your cost is covered, then submit any remaining eligible expenses to the HCSA for reimbursement.

Am I required to participate in the New York State Health Insurance Program (NYSHIP) in order to enroll in the HCSA?

No, you are not required to participate in NYSHIP to enroll in the HCSA. 

If my spouse or I have health insurance coverage elsewhere, can I still enroll in or use the HCSA to pay for my family’s expenses?

Yes. You can participate in the HCSA even if you are not enrolled in NYSHIP.

If my spouse and I are state employees, can we both enroll in the HCSA?

Yes. Any eligible state employee may enroll in the HCSA. However, if both spouses enroll, each health care expense can only be reimbursed once.

Whose expenses are eligible for reimbursement under the HCSA program?

The HCSA may be used to reimburse health care expenses for you, your spouse, and anyone who is defined as a qualifying child or qualifying relative by the Internal Revenue Code.

Are my domestic partner’s health care expenses eligible for reimbursement from my HCSA?

According to the IRS, health care expenses for a domestic partner can be reimbursed through the HCSA if the domestic partner qualifies as a dependent under the Internal Revenue Code.

Can expenses that are reimbursed by the HCSA be deducted on my tax return as a medical expense?

No, because you have already received reimbursement with tax-free dollars. Only expenses that are not reimbursed through an insurance plan, some other source, or the HCSA may be deducted on your income tax return.

What happens if my medical expenses change during the plan year? Can I increase or decrease my HCSA contributions?

No. Per Internal Revenue Service (IRS) rules, a change in medical expenses is not a qualifying event that would allow you to change your HCSA election amount. So, if you incur more medical expenses during the plan year you cannot increase your HCSA contributions. If your medical expenses are less than you had planned, you cannot reduce your HCSA contributions.

If I have an eligible change in status, can I increase or decrease my HCSA amount?

Yes, however your change must be consistent with the event. The IRS requires that the FSA administrator treat the periods prior to and subsequent to the change as two separate periods of coverage for reimbursement purposes.

If I was not eligible to enroll in the HCSA during the open enrollment period, but gain eligibility during the plan year, can I enroll mid-year?

No. A change in eligibility is not a change in status event that would allow you to enroll during the plan year.

What happens if I retire, terminate employment with the State, or take an unpaid leave of absence during the year?

Your coverage will end once you leave the payroll and stop contributing to your account, unless you plan ahead during open enrollment. You can contribute your full annual election before you leave the payroll, which will allow you to use your account for expenses incurred after you leave.

When you enroll, make sure to indicate the number of paychecks you expect to receive before you leave the payroll. If you are unable to plan ahead, you may still continue to participate in the HCSA by making after-tax COBRA payments directly to the FSA administrator. 

I am an adjunct professor at a state university, and don’t expect to receive paychecks during the summer months. Will that affect my participation in the HCSA?

Yes. If you are an adjunct employee and leave the payroll at the end of the spring semester, your coverage will end once you stop contributing to your account. However, you can plan ahead during the open enrollment period. In your enrollment application, select fewer payrolls to complete your contributions by the end of the spring semester. Your coverage will then continue uninterrupted after you leave the payroll.

What happens to the money in my account if I leave state service during the plan year? Can I use it after I leave?

If you retire, leave state employment, go on leave without pay, or otherwise stop contributing to your account, the money in your account can only be used for services that occurred before you left the payroll. However, if you continue to contribute to the HCSA after you leave the payroll by making after-tax payments directly to the FSA administrator, or if you pre-pay the balance of your annual election before leaving the payroll, you will be able to submit claims for services that occur after you leave your state job.

Can I request reimbursement from the HCSA for services I receive before the plan year begins if I am not billed until after the plan year starts?

No. According to IRS rules, a qualified expense is “incurred” at the time the service is provided, not when you are billed (or charged) or actually pay for the service. Therefore, reimbursements made during a plan year are only for eligible medical services received during that same plan year.

Can health care services that require upfront payment to the provider be reimbursed from the HCSA in a single plan year, even if the health care is delivered over several plan years?

No. IRS regulations do not allow medical expenses to be reimbursed through the HCSA until they have been incurred. Expenses are not incurred until treatment is provided, regardless of when you pay the provider.

How do I know if my child’s orthodontia will be reimbursed? How are orthodontic costs reimbursed if I pay my provider on a monthly payment plan?

Orthodontic expenses are a reimbursable expense. At the beginning of the plan year in which you first request reimbursement for these costs, you must submit a copy of the service contract between you and the orthodontist describing the payment arrangement/schedule.

Orthodontia costs that are paid on a monthly payment plan will be reimbursed after each monthly payment is due. However, if you pre-pay the entire cost of orthodontia treatment up front, you will only be reimbursed in a particular plan year for the value of the services that will be provided during that plan year. You must submit a claim for the pro-rated monthly amount on or after the beginning of each month of service, since you will not be reimbursed automatically.

Are dental implants reimbursable?

Yes. Dental implants are reimbursable as long as they are not a cosmetic treatment.

Will the HCSA reimburse the cost of my prescription drug, even if my insurance plan won’t pay for part of it?

Any prescription drug can be reimbursed as long as it is used to treat a medical condition. Prescription drugs that are primarily used for cosmetic purposes can’t be reimbursed.

Can over-the-counter drugs, herbal medicines, and homeopathic remedies be reimbursed if my doctor or medical provider prescribes them to treat my medical condition?

OTC drugs, medicines, and biologicals are eligible for reimbursement under the HCSA. Dietary supplements and vitamins are reimbursable if recommended by a doctor to treat a medical condition. You will need to submit a letter of medical need written by your doctor with your claim. However, herbal medicines and homeopathic remedies are not reimbursable under the HCSA.

Can travel expenses related to my medical care be reimbursed through my HCSA?

Yes. The IRS permits you to be reimbursed for amounts paid for transportation primarily for, and essential to, medical care. You can receive reimbursement for car mileage (.21 cents per mile in 2024), parking fees, tolls, subways, buses, trains, air travel, and lodging if the costs are incurred primarily to receive medical care.

Will the plan pay for upgrades to my prescription glasses?

Yes. You can be reimbursed for the cost of upgrades or add-ons (such as scratch-resistant coating) to your prescription lenses and frames. There is no limit on dollar amounts of the upgrades or add-ons. Non-prescription glasses, warranties, and sunglasses are not reimbursable.