Tax Benefit Programs

OFFICE OF HUMAN RESOURCES AND LABOR RELATIONS
PAYROLL

FLEXIBLE SPENDING ACCOUNTS PROGRAM

The City's Employee Benefits Program offers several pre-tax benefit programs that allow City employees to defer or reduce taxes. The New York City Office of Labor Relations administers the City's pre-tax benefit programs and has detailed information and enrollment forms. The following Flexible Spending Accounts allow employees to pay for certain expenses with pre-tax dollars:

  • Health Care Flexible Spending Account (HCFSA)
  • Dependent Care Program (DeCAP)
  • MSC Premium Conversion
  • Also administered by the NYC Office of Labor Relations is the Health Benefits Buy-Out Waiver Program.

FLEXIBLE SPENDING ACCOUNTS

Health Care Flexible Spending Account (HCFSA)

The City's Flexible Spending Accounts are allowable under IRS Code 125. Through the Health Care Flexible Spending Account (HCFSA), City employees can pay for out-of-pocket medical expenses, not covered by health insurance, with pretax dollars. By enrolling in HCFSA, deductions from your pay are put into a special account that is used to reimburse you for covered medical expenses, up to annual contribution limit. Federal regulations require that you use the entire amount in your HCFSA account by the end of each Plan Year (December 31st). If you do not use the entire amount you allocate to your account, you forfeit the unused balance. Payroll deductions for HCFSA are shown in Box 14 of your W-2 Wage and Tax Statement.

Dependent Care Program (DeCAP)

The Dependent Care Assistance Program (DeCAP) works the same way with deductions from your pay going to a special account used to reimburse you for eligible dependent care expenses up to the annual contribution limit. Federal regulations require that you use the entire amount in your DeCAP account by the end of each plan year (December 31st). If you do not use the entire amount you allocate to your account, you forfeit the unused balance. Eligible dependent care expenses may include care for young children or elderly dependents by a licensed caregiver.

The advantage of each Flexible Spending Account (FSA) is that the deductions from your pay to these accounts reduce your gross income for federal income tax, social security, and Medicare tax purposes. The adjustments to your wages are reflected on your W-2. You still pay state and local taxes on FSA contributions. Payroll deductions for DeCAP are shown in Box 14 and Box 10 of your W-2 Wage and Tax Statement.

MSC Premium Conversion Program

The MSC Premium Conversion Program automatically increases take home pay to employees who have payroll deductions for health insurance premiums and optional riders since these payments are not subject to federal or FICA taxes. Employees can opt out of the program during the Health Benefits Transfer Period in October of each year. Payroll deductions for MSC are shown in Box 14 of your W-2 Wage and Tax Statement.

Health Benefits Buy-Out Waiver Program

The Health Benefits Buy-Out Waiver Program allows City employees who are covered under a health insurance plan through an employer other than the City of New York or through a spouse's plan to waive their City health insurance and receive a cash incentive. Employees waiving family coverage receive $1,000 annually, and employees waiving individual coverage receive $500 annually. Payments are made in two equal installments in June and December and are subject to tax. Payments for the Health Benefits Buy-Out Worker program are included in your taxable wages in Box 1 of your W-2.


For more information on all of the City's Flexible Spending Accounts Program and enrollment forms, see the Office of Labor Relations web site at https://www1.nyc.gov/site/olr/fsa/fsahome.page

OTHER PRE-TAX PROGRAMS

  • Pension plans are offered to New York City employees through various pension systems, e.g. New York City Employees Retirement System (NYCERS), Teachers Retirement System (TRS), TIAA, etc.

  • Deferred Compensation Plan is a retirement savings plan that lets you save for the future with before tax dollars through easy payroll deductions.

Contact your Benefits Officer in A-207, ext. 6525 for more information.

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