The Health Care Reimbursement Account (HCRA) and Dependent Care Reimbursement Account (DCRA) are governed by Section 125 of the Internal Revenue Code that allow you to set aside before-tax dollars from each paycheck to help pay eligible health care and dependent care expenses for you and your family.
How the Reimbursement Accounts Work
When you enroll in a reimbursement account, you elect how much money you want to put into the account from each paycheck over the course of the year. Your before-tax contributions are automatically deducted each pay period. As a result, you have a lower net income and pay less in income tax.
When you have an eligible expense, you pay the expense and then submit a claim form to the County’s HCRA/DCRA administrator. The administrator uses the funds in your account to reimburse you for your expense.
You may file claims for reimbursement account expenses incurred at any time during the calendar year, and claims must be filed before March 31st of the following year.
HCRA expenses are reimbursed from your account as they are incurred. For example, if you decide to contribute $1,200 to your HCRA over the course of the year and you have $1,200 of eligible expenses in February, you may request reimbursement for $1,200 at that time even though you don’t yet have the full amount in your account.
DCRA expenses are reimbursed only if there are sufficient funds in your account. If your claim is for more than you have in your account, you’ll be reimbursed for the amount in your account and may resubmit the unreimbursed expense later.
A HCRA and a DCRA are separate accounts. Although you may enroll in both accounts, you can’t use money from one account to reimburse yourself for expenses that are eligible under the other account.
The maximum contribution amounts may be lower for employees who are classified as “highly compensated employees” according to IRS rules. You will be notified of the limit on either your HCRA or your DCRA contributions, if any apply.
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