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Health Care Reimbursement Account (HCRA)
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A Health Care Reimbursement Account (HCRA) is a great tool for helping you manage your heath care budget. With an HCRA, you have the ability to contribute pre-tax dollars to pay for eligible medical expenses including prescriptions, doctor’s office copays, health insurance deductibles, coinsurance, some over-the-counter (OTC) medications, and much more. As an added benefit, the the Flexible Employees’ Benefits Board provides a $50.00 credit to any member who enrolls in the HCRA with a minimum annual contribution of $120.00.

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How does the HCRA account work?

During open enrollment (November 1 - November 30), you will decide how much to contribute to your HCRA via payroll deductions for the upcoming year. While enrolling online, you will elect the Per Pay Period Amount, which will be deducted from your paycheck monthly or twice a month (depending on your pay schedule) and the deduction is made before taxes are withheld. This amount will be deposited into your HCRA. There are no user fees associated with this account.

When you incur out-of-pocket eligible health care expenses, you will be reimbursed from your HCRA. When your claim is submitted to ConnectYourCare (CYC) they will reimburse you for your out-of-pocket expenses according to your HCRA plan.

How are you reimbursed under the HCRA?

There are 2 methods of reimbursement under the HCRA.
  • Flexible Spending Card
    The Flexible Spending Card utilizes the Visa network. If your doctor, dentist or hospital accepts Visa as payment, then you can “swipe” your copays and deductibles. You must save all receipts and validate purchases for items such as glasses and contacts by submitting the receipts. The IRS requires that CYC validate each Flexible Spending Card transaction. If CYC cannot substantiate a charge by reviewing your health claims file then they will send you correspondence asking for the receipt. You are required to provide receipts when you are asked. Failure to provide a receipt or provide a receipt in a timely manner will result in the deactivation of your Flexible Spending Card and the funds in your HCRA will not be available to you until you reimburse the amount in question to your account. While this method of reimbursement is popular, it is not for everybody.
  • Manual Method of Reimbursement
    This method of reimbursement is mandatory if you are covered under a second insurance plan other than the State Employees’ Health Insurance Plan. Under this plan, you must attach your receipts for out-of-pocket expenses to a claim form that can be mailed or faxed to CYC for reimbursement. This method allows the secondary insurance to pay and then you file any amount that is left over. This method is also used by employees who are saving their contribution amount for one particular procedure.
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Additional Information
What are the minimum and maximum deduction amounts?

The minimum acceptable HCRA deduction is $5.00 per family per pay period.
The maximum acceptable HCRA deduction is $110.42 per family per pay period.

New employees enrolling in the HCRA, after the plan year has started, must have a minimum contribution of $120 annually with the maximum contribution being $2,850 annually.

Eligible Employees

The term “eligible employee” includes only:
Full-time and part-time State employees who receive their compensation through means of a State warrant drawn upon the State Treasury. (For purposes of the HCRA and the DCRA, part-time employees may be excluded from participation by IRS rules. Part-time employees should consult their tax advisor before enrolling in the HCRA or the DCRA.) Members of the Legislature and the Lieutenant Governor are eligible during their term of office.

Exclusions - You are not eligible for coverage if you are classified on the State of Alabama’s records as an employee employed on a seasonal, temporary, intermittent, emergency or contract basis.

Eligible Dependents

Includes your spouse or any other person that you claim for Federal Income Tax purposes.

Open Enrollment

Annual Open Enrollment is held in November for coverages to be effective January 1 of each year. Open enrollment applies to eligible employees who wish to change coverages, add coverages, or delete coverages.

New Employees

New employees may enroll within 90 days of employment, with coverage effective the first day of the month following the receipt of the enrollment.

New employees enrolling in the HCRA, after the plan year has started, must have a minimum contribution of $120 annually with the maximum contribution being $2,700 annually.

Status Changes

Once an employee enrolls, the election remains in effect until January 1 of the following year (the Plan Year), under IRS regulations, unless the employee has a qualifying change in status. This means that you may not change your insurance coverage or participation except when you are permitted due to a qualifying change in status or during Open Enrollment. The change in your election must be consistent with the change in your status.

Qualifying changes in status include:

  • Addition of dependent(s) through marriage, birth or adoption of a child, legal custody or placement for adoption;
  • Loss of dependent(s) through divorce, annulment, legal separation, death of a spouse or other dependent, or loss of legal custody;
  • Unpaid leave of absence for you or your spouse;
  • Dependent’s loss of coverage due to age or student’s status;
  • Change of residence or worksite of employee, spouse or dependent;
  • Compliance with Issuance of family relations judgment, decree or order (i.e. QMCSO);
  • Medicare or Medicaid entitlement of employee, spouse or dependent;
  • Taking leave under the Family and Medical Leave Act;
  • To make changes in IRC Section 401 (k) and 401 (m) elective and after-tax deferrals as permitted by those sections;
  • HIPAA Special Enrollment events;
  • Significant change in medical benefits or premiums.

If a qualifying change in status occurs, the employee must submit a Revoke Election Form certifying the status change. This form must be submitted to the Flexible Employees’ Benefits Board within 30 days of the event.

If you are not enrolled, but you want to enroll following a change in your status, complete the Salary Reduction Agreement, and send it to the Flexible Employees’ Benefits Board within 30 days of the event. Attach a letter explaining your status change.

Approved changes are effective the first of the month following receipt of the forms by the Flexible Employees’ Benefits Board.

Termination of Election

Your election to participate terminates on the earliest of the following dates:

  • On the last day of the month in which employment terminates. Employment is deemed terminated on the last day of active work. A terminated employee or an employee returning from a leave of absence without pay may reenroll upon return to active status.
  • When this plan is discontinued.
  • On the last day of the month for which contributions have been paid.
  • For the HCRA and the DCRA, on December 31 of each Plan Year.