How the BP spending accounts work

Important information about how the accounts work
mechanic

BP offers two types of spending accounts, both administered by PayFlex (which is part of Aetna):

  • The Health Care Flexible Spending Account (HCFSA) — allows you to pay yourself back for eligible health care expenses for you and your eligible dependents that are not paid by any medical, dental and/or vision plan.
  • The Dependent Care Spending Account (DCSA) — allows you to pay yourself back for eligible dependent day care expenses so you (and your spouse, if married) can work or attend school on a full-time basis. This does not include expenses incurred for health care services.

The HCFSA and the DCSA are completely separate. This means you cannot transfer contributions between the two accounts. In addition, you cannot use contributions in the HCFSA to pay for dependent care expenses or contributions in the DCSA to pay for health care expenses. Also, please note that only the HCFSA is subject to ERISA rules and regulations — the DCSA is not subject to ERISA.

Spending accounts at-a-glance

Option
Eligible dependents are defined as shown below
Contribution limits
Health Care Flexible Spending Account (HCFSA)
  • An individual whom you can claim as your dependent for federal income tax purposes.
  • A child for whom you are required to provide health benefits under a court order.
  • Contribute from $120 to the maximum amount allowed by the IRS at the start of the particular plan year in which you participate before-tax each plan year. 
Dependent Care
Spending Account (DCSA)
  • Any child under age 13 whom you can claim as a dependent for federal income tax purposes. If you are divorced or legally separated and have primary custody of the child, you do not need to be able to claim the child as a dependent for federal income tax purposes.
  • Your spouse or other dependent (including a parent), regardless of age:
    • Who is physically or mentally incapable of caring for himself/herself.
    • Who lives in your home for at least one-half of the tax year.
    • Who earns no more than the annual legal limit ($3,950 in 2014).
    • Whom you can claim as a dependent for federal income tax purposes.
  • Contribute from $120 to $5,000 before-tax each plan year, subject to the following legal limits:
    • Regardless of your income tax filing status, your maximum annual contribution cannot be more than what you or your spouse earns (or is expected to earn), whichever is less. If your spouse does not have any earned income but is disabled or a full-time student, your spouse will be considered to earn $3,000 a year if you have one eligible dependent or $6,000 a year if you have two or more eligible dependents.
    • The $5,000 maximum applies to all contributions you and your spouse make to any dependent care spending account during the calendar year, whether at BP or through another employer.
    • If you and your spouse file a joint income tax return, you may contribute up to $5,000 for the year, regardless of the number of eligible dependents you have.
    • If you and your working spouse file separate income tax returns, the maximum annual contribution you can make is $2,500.
 
Note: When you enroll in the HCFSA and/or the DCSA during the plan year rather than during annual enrollment, your contribution elections will be allocated over the remaining months of the plan year for which you are enrolling.
 

Before you decide on the amount to contribute to the HCFSA and/or the DCSA, you need to consider:

  • Any anticipated eligible health care expenses not covered by a health plan (if you are thinking of enrolling in the HCFSA).
  • Any anticipated eligible dependent care needs (if you are thinking of enrolling in the DCSA).
  • Any tax considerations that could affect your decision.
  • Whether or not you currently contribute to a Health Savings Account, or expect to in the very near future. Note: You may not contribute to both an HSA and an HCFSA in the same BP plan year.

Keep in mind that once you are participating in the HCFSA and/or DCSA, you cannot decrease your contribution amount during the plan year. However, you may be able to increase your contribution amount or stop participating in the HCFSA or DCSA if you have a qualifying status change for which such a change would be consistent.

Also keep in mind that you cannot transfer money between the accounts, this means you cannot use the HCFSA to pay for dependent care expenses and you cannot use the DCSA to pay for health care expenses. 

Contribution limits and highly compensated employees

If the HCFSA and/or DCSA do not satisfy non-discrimination tests, elected plan year contributions may be adjusted for highly compensated employees. If this applies, you will be notified.

 

Publication date: April 2019

 

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