Overview

You can save money by paying for eligible health care and dependent care expenses with accounts that you fund with pre-tax dollars. The City offers two different accounts that can help lower your taxes.

Accounts:

  • Health Savings Account (HSA): You are automatically enrolled in an HSA when you enroll in the BCBS Savers Choice medical plan.
  • Flexrap:
    • Flexrap Healthcare Account: This account is used to pay for or reimburse yourself for qualified out-of-pocket health care expenses for medical, behavioral health, pharmacy, dental, or vision.
    • Limited Purpose Healthcare Account: This account is the only option available to those enrolled in the Savers Choice Plan with HSA. Flexrap dollars can be used for out-of-pocket expenses for dental and vision only.
    • Daycare Account: This account is available for eligible child and adult daycare expenses.

Key features

  • Tax-free money – Money goes in tax-free and comes out tax-free when it’s used for eligible expenses.
  • Convenient payroll deductions – Your Flexrap contribution is fixed for the calendar year unless a relevant life event occurs. Your HSA contribution can be started, changed, or stopped at any time.
  • Helpful budgeting tool – Plan for upcoming expenses by setting aside money each paycheck.

Note: You must enroll each year if you want to contribute to Flexrap. Enrollment does not continue automatically from year to year.

iconHow much could you save?

Here’s an example. Let’s say Tom decides to set aside $2,000 in an HSA or Flexrap account for the year. Normally, on that money, he’d pay $480 in federal income tax, $100 in state income tax, and $153 in payroll tax. So, by contributing that $2,000 to his HSA or Flexrap account, he’ll get $733 in tax savings for the year.

Without an HSA or Flexrap, Tom would pay ... Savings
24% in federal income tax $480
5% in state income tax $100
7.65% in payroll tax $153
His total tax savings for the year with an HSA or Flexrap $733

This hypothetical illustration is for educational purposes only. Dollar amounts or savings will vary depending on income, state and city tax rules, and other factors. Please consult a tax, legal, or financial advisor about your own personal situation.

Health Savings Account

With the BCBS Savers Choice medical plan, you are automatically enrolled in a Health Savings Account (HSA) administered by HealthEquity. The HSA is a tax-free savings account that you own. You can use it to pay for eligible health expenses anytime, even in retirement.

HSA features

Put money in tax-free.
  • Contribute to your HSA through before-tax payroll deductions (up to the IRS annual limits).
  • Change your contribution amount anytime.
Get City of Phoenix contributions.
  • $750 for employee-only coverage.
  • $1,500 if you cover dependents.
Pay for care tax-free.*
  • Pay for eligible medical, dental, and vision expenses for you and your family using your HSA debit card (provided sufficient funds are in your account) or arrange for reimbursement later.
  • Track your spending, check your balance, reimburse yourself, and more on the HealthEquity website.
Carry unused money over.
  • All the money in your HSA is yours to keep, year after year.
  • You can build up savings to pay for future health care expenses. You can even invest your money once it reaches a minimum balance, which gives you the potential for tax-free earnings growth and a way to plan ahead for your medical costs in retirement.
 

*Money in an HSA can be withdrawn tax-free as long as it is used to pay for qualified health-related expenses. If money is used for ineligible expenses, you will pay ordinary income tax on the amount withdrawn, plus a 20% penalty tax if you withdraw the money before age 65.

   

Contribution limits

The IRS sets annual limits on the total amount of money that can be contributed to your HSA. In 2019, the limits on contributions [from both you and the City] are:

  • $3,500 for employee-only coverage.
  • $7,000 for family coverage.

Add $1,000 to these limits if you’re age 55 or older.

iconWho’s eligible for an HSA?

In order to establish and contribute to an HSA, you:

  • Must be enrolled in the BCBS Savers Choice medical plan.
  • Can simultaneously participate in the Flexrap Limited Purpose Account.
  • Cannot be enrolled in any other medical coverage, including a spouse’s plan or Medicare.
  • Cannot be claimed as a dependent on someone else’s tax return.

You should review IRS rules for making HSA contributions if you will turn age 65 during the year.

You cannot use your HSA to pay for expenses incurred by a qualified domestic partner.

For more information, see IRS Publication 969.

iconIncrease your tax savings with the Flexrap Limited Purpose Healthcare Account

Use your HSA together with the Flexrap Limited Purpose FSA account for additional tax savings.

Flexrap

Using Flexrap is like getting a discount on everyday health and/or dependent care expenses because you’re paying with tax-free money. There are separate Flexrap accounts for health care and dependent care.

Flexrap Healthcare Account

Available to employees who do not enroll in an HSA, or do not elect medical coverage

  • Contribute up to $2,650 (2018 limit; 2019 limit has not been announced yet) through pre-tax payroll deductions to help cover eligible medical, vision, and dental expenses.
  • Choose your contribution amount during 2019 Benefits Open Enrollment. You can only change your contribution amount during the year if a relevant life event occurs.
  • Your annual contribution will be divided into equal deductions from each paycheck. Your entire annual contribution amount is available to you from the beginning of the plan year.
  • Your entire annual contribution is available to you from the beginning of the plan year.
  • Spend your money by using your ASI debit card, or log in to the asiflex.com online portal or mobile app to request reimbursement for payments you’ve made.
  • Unused money does not carry over at the end of each year — use it or lose it. Be sure to estimate your contribution carefully!

Flexrap Limited Purpose Healthcare Account

Available only to employees who are enrolled in the HSA

  • Designed to work together with your Health Savings Account (HSA) for additional tax-saving opportunities.
  • Contribute up to $2,650 (2018 limit; 2019 limit has not been announced yet) through pre-tax payroll deductions. This account can be used on eligible dental and vision expenses only. For a list of eligible expenses, refer to IRS Publication 502.
  • Choose your contribution amount when you enroll in benefits. You can only change your contribution amount during the year if a relevant life event occurs.
  • Your annual contribution will be divided into equal deductions from each paycheck. Your entire annual contribution amount is available to you from the beginning of the plan year of, if you are a new hire, when your benefits first become effective.
  • Spend your money by using your ASI debit card, or log on to the asiflex.com online portal or mobile app to request reimbursement for payments you’ve made.
  • Unused money does not carry over at the end of each year – use it or lose it. Be sure to estimate your contribution carefully!

Flexrap Daycare Account

Available to all employees

  • Contribute up to $5,000 in 2019 through pre-tax payroll deductions to help cover your eligible dependent care expenses, including child care for children up to age 13 and care for dependent adults.
  • Choose your contribution amount when you enroll for benefits. You can only change your contribution amount during the year if a relevant life event occurs.
  • Your annual contribution will be divided into equal deductions from each paycheck. You only have access to money that has actually been deposited into your account.
  • Pay for your dependent care expenses, then log in to the asiflex.com website to request reimbursement for payments you’ve made.
  • Unused money does not carry over at the end of each year – use it or lose it. Be sure to estimate your contribution carefully!

Compare Accounts


HSA Flexrap Limited Purpose Healthcare Account Flexrap Healthcare Account Flexrap Daycare Account
Available with … BCBS Savers Choice Plan PPO and HMO Not tied to medical plan enrollment
Receive City of Phoenix contribution Yes No No No
Change your contribution amount anytime Yes No No No
Access your entire annual contribution amount at the beginning of the plan year No Yes Yes No
Access only funds that have been deposited Yes No No Yes
Use the money for … All eligible health care expenses Only dental and vision expenses All eligible health care expenses Eligible dependent care expenses
“Use it or lose it” at year-end No Yes Yes Yes
Money is always yours to keep Yes No No No