|(a) Election of benefits.
(1) An eligible employee may elect to participate in
the health care and/or dependent care reimbursement accounts within
the flexible benefits plan by making an election and executing an
election form or enrolling electronically.
(2) An employee who becomes eligible after the beginning
of a plan year has 30 days from the date of eligibility to elect or
decline benefits by executing an election form.
(3) By enrolling in the plan, the employee agrees to
a reduction in compensation or agrees to after-tax payments equal
to the participant's share of the cost and any fees for each reimbursement
(4) An election to participate in a reimbursement plan
must be for a specified dollar amount plus any administrative fee.
(5) An annual enrollment period will be designated
by the Employees Retirement System of Texas and shall be prior to
the beginning of a new plan year. The annual enrollment period shall
provide an opportunity to change and to elect or decline benefit options.
(6) An active employee who is enrolled in reimbursement
accounts immediately prior to the annual enrollment period will be
automatically re-enrolled with the same elections and contribution
amounts for the new plan year unless the active employee takes action
during the annual enrollment period to change contribution amounts
or to decline participation.
(b) Effects of failure to elect.
(1) If the Employees Retirement System of Texas does
not receive an election form from an eligible employee to participate
in the reimbursement accounts by the due date, it shall be deemed
an express election and informed consent by the eligible employee
(A) receive cash compensation as a benefit by reason
of failure to purchase optional benefits in lieu of cash compensation;
(B) in the case of automatic re-enrollment during the
annual enrollment period, to continue participation in the reimbursement
accounts with the same contributions for the new plan year.
(2) To the extent an eligible employee does not elect
the maximum permissible participation amounts hereunder, he shall
be deemed to have elected cash compensation.
(c) Benefit election irrevocable except for qualifying
(1) An election to participate shall be irrevocable
for the plan year unless a qualifying life event occurs, and the change
in election is consistent with the qualifying life event. The plan
administrator may require documentation in support of the qualifying
(2) A qualifying life event occurs when an employee
experiences one of the following changes:
(A) change in marital status;
(B) change in dependent status;
(C) change in employment status;
(D) change of address that results in loss of benefits
(E) change in Medicare or Medicaid status, or Children's
Health Insurance Program (CHIP) status;
(F) significant cost of benefit or coverage change
imposed by a third party provider other than a provider through the
Texas Employees Group Benefits Program; or
(G) change in coverage ordered by a court.
(3) An election form requesting a change in election
must be submitted on, or within 30 days after, the date of the qualifying
life event, provided, however, a change in election due to CHIP status
under paragraph (2) of this subsection must be submitted on, or within
60 days after, the change in CHIP status.
(4) A change in election as provided in this subsection
becomes effective on the first day of the month following the date
of the qualifying life event.
(d) Payment of flexible benefit dollars.
(1) Flexible benefit dollars from an active duty employee
shall be recovered through payroll withholding at least monthly during
the plan year and remitted to the Employees Retirement System of Texas
for the purpose of purchasing benefits. For the health care reimbursement
account only, and except as otherwise provided in §85.3(b)(3)(D)
of this title (relating to Eligibility and Participation), flexible
benefit dollars from employees on leave without pay status or who
have insufficient funds for any month shall be recovered through direct
after-tax payment from the employee or upon the return of the employee
to active duty status from payroll withholding, for the total amount
(2) An employee's flexible benefit dollars with respect
to any month during the plan year shall be equal to the authorization
on the employee's election form plus any administrative fees.
(3) Flexible benefit dollars received by the Employees
Retirement System of Texas shall be credited to the participant's
dependent care reimbursement account and/or health care reimbursement
account, as appropriate.
(e) Forfeiture of account balances.
(1) The amount credited to a participant's reimbursement
account for each benefit election for any plan year will be used to
reimburse or pay qualified expenses incurred during the eligible employee's
period of coverage in such plan year, if the claim is electronically
adjudicated or if the participant files a correctly completed claim
for reimbursement on or before December 31 following the close of
the plan year.
(2) Except as provided by subsection (g) of this section,
any balances remaining after payment of all timely and correctly filed
claims postmarked no later than December 31 following the close of
the plan year, shall be forfeited by the participant and be available
to pay administrative expenses of the flexible benefits program.
(3) An unexpended balance in an amount of $25 or less
is not eligible for carryover under subsection (g) of this section,
and shall be forfeited by the participant and be available to pay
administrative expenses of the flexible benefits program.
(f) Reimbursement report to participant. The plan administrator
or its designee may provide to the participant periodic reports on
each reimbursement account, showing the account transactions (disbursements
and balances) during the plan year. These reports may be provided
periodically through electronic means.
(g) Carryover of unexpended balances. Pursuant to IRS
Notice 2013-71, for a plan year beginning on or after September 1,
2014, a participant may carry over up to $500 of unspent flexible
benefit plan dollars to the immediately following plan year. The flexible
benefit dollars carried over may be used to pay or reimburse incurred
expenses under the health care reimbursement plan during the entire
plan year to which the dollars are carried over. A participant is
entitled to carry over a maximum of $500, and any balance in excess
of this amount is forfeited as provided by subsection (e) of this
|Source Note: The provisions of this §85.7 adopted to be effective August 12, 1988, 13 TexReg 3754; amended to be effective September 1, 1989, 14 TexReg 3988; amended to be effective September 1, 1990, 15 TexReg 4646; amended to be effective September 1, 1991, 16 TexReg 3779; amended to be effective September 1, 1992, 17 TexReg 2874; amended to be effective September 1, 1996, 21 TexReg 6897; amended to be effective February 12, 1998, 23 TexReg 1313; amended to be effective September 1, 1998, 23 TexReg 4571; amended to be effective September 16, 1999, 24 TexReg 7276; amended to be effective March 26, 2000, 25 TexReg 2400; amended to be effective July 10, 2000, 25 TexReg 6557; amended to be effective July17,2003, 28 TexReg 5539; amended to be effective December 31, 2003, 28 TexReg 11625; amended to be effective May 29, 2005, 30 TexReg 3022; amended to be effective September 15, 2005, 30 TexReg 5809; amended to be effective June 14, 2007, 32 TexReg 3356; amended to be effective March 15, 2010, 35 TexReg 2205; amended to be effective June 10, 2014, 39 TexReg 4486; amended to be effective March 14, 2016, 41 TexReg 1860