Employee Matters

This column is prepared by staff from the Office of Human Resources. E-mail questions to benefits@ohr.wisc.edu or call 262-5650. For more information, visit http://www.bussvc.wisc.edu/ecbs/ecbs.html.

Employee Reimbursement Accounts (ERA)

What is the Employee Reimbursement Account program?

It is an optional benefit plan that allows eligible employees to contribute a portion of their income through payroll deduction to an account to pay eligible medical and dependent care expenses from pre-tax income. Federal, Social Security and state taxes are calculated on your remaining salary. You keep more money in your pocket because you pay less in taxes.

Under the ERA program, certain benefit plan premiums are automatically deducted on a pre-tax basis unless an employee waives the pre-tax deduction. Health Insurance, a portion of State Group Life Insurance, DentalBlue Dental Insurance, and EPIC Dental and Excess Medical Insurance premiums are taken on a pre-tax basis.

When is the annual open enrollment period?

The period is Oct. 9–Nov. 17 for coverage effective Jan. 1. You must re-enroll every plan year. An ERA booklet will be mailed to your campus address in early October.

Who is eligible to enroll in the program?

Any permanent/project classified or unclassified employee. Fellows, scholars, research assistants, student hourly employees and limited-term employees are not eligible to participate.

What types of expenses are allowable from a medical expense account?

Eyeglasses, contact lenses and solutions, prescriptions, uncovered dental expenses, insurance co-payments and many over-the-counter drugs. A complete list will be available in the 2007 ERA booklet.

What types of expenses are allowable from a dependent care account?

Dependent child, adult and elder care expenses incurred that allow you and/or your spouse to work, actively look for work or attend school full time.

Can I claim reimbursements from the ERA program on my tax return?

No. You can either itemize medical expenses if they exceed 7.5 percent of adjusted gross income or use the medical reimbursement account. You can either use the dependent care reimbursement account or use the child care tax credit on your taxes.

How am I reimbursed?

Money is deducted from each of your paychecks on a pre-tax basis and placed in an account with Fringe Benefits Management Co. (FBMC). After you receive service or pay for a product, submit the receipt to FBMC. Medical expenses are reimbursed immediately, despite the value of your account at the time. Dependent care expenses will be reimbursed only when your account is large enough for reimbursement.

What happens if I don’t use all of the money in the account by the end of the year?

All expenses must be incurred by the end of the plan year or the money is forfeited. You have until March 15, 2008, to incur medical expenses and Dec. 31, 2007, to incur dependent care expenses for the 2007 plan year. All claims must be submitted to FBMC no later than April 15, 2008.