Employee Matters

This column is prepared by staff of the Employee Compensation and Benefits Services office. For more information, visit the EC&BS Web site, e-mail the office at employee@bussvc.wisc.edu or call 263-7556 or 262-5650.

Employee Reimbursement Accounts (ERA) program

What is ERA?

ERA is a voluntary pre-tax benefit plan that allows eligible employees to set money aside before tax to pay for medical or dependent care expenses.

Why would I participate in ERA?

Because contributions to an ERA account are taken from your payroll check before your state and federal taxes are calculated, the tax withheld is less, therefore the cost of your medical services or purchases or dependent care will cost you less.

Are there other advantages of participating in ERA?

You can spread out the contributions over a calendar year but be reimbursed for the full amount upon receipt of the services. For example, assume that you have $480 of dental work to be done in January. You elect to contribute $40 monthly to be withheld for ERA. You are eligible to have the entire $480 reimbursed in January although you would not contribute the entire obligation until December.

When can I enroll in ERA?

A new employee can enroll in ERA within 30 days from the date of hire with coverage effective on the first of the month following receipt of the enrollment form by their payroll and benefits office.

If an employee did not enroll when first hired, there is an annual enrollment opportunity that occurs each year around October with coverage effective on Jan. 1 of the following year. The 2006 annual enrollment will be Oct. 10-Nov. 18.

What expenses are allowable under ERA?

Allowable medical expenses include eyeglasses, contact lenses, solutions, prescriptions, insurance co-payments and many over-the-counter drugs. Allowable dependent expenses are child care, adult and elder care expenses to allow you and/or your spouse to work, to actively look for work or to attend school full-time. Dependent care expenses include costs of a qualified dependent-care facility or in-home location, before and/or after-school care, local day-camp fees and preschool and nursery school expenses.

How do I determine how much to contribute to ERA?

Estimate your annual expenses for each type of account. There are calendar-year minimums and maximums for each account. Medical accounts have a minimum of $100 per year and a $7,500 maximum. If you elect a larger amount than you use for the calendar year, the remaining amount is forfeited.

How does an ERA work?

Money is deducted from each payroll check and transmitted to Fringe Benefit Management Co. When you receive medical services or purchases, you submit the paid receipt to Fringe Benefit Management Co. for reimbursement.

What are the rules for expending funds?

Medical services or purchases can be reimbursed in full even though you have not met your annual contribution amount. For dependent care, the money must be in your account before you can file for reimbursement of expenses. To learn more, visit http://www.bussvc.wisc.edu/ecbs/emp-era-menu.html, or contact a benefit specialist at employee@bussvc.wisc.edu.