Healthcare FSA Basics
What is a healthcare flexible spending account?
A healthcare flexible spending account (FSA) allows you to pay for qualified out-of-pocket medical expenses on a pre-tax basis.How much can I allocate to my healthcare FSA?
While there is no statutory minimum or maximum contribution for healthcare FSAs, your employer has established annual plan limits. Your annual limits are specified in your summary plan description.What is the maximum reimbursement amount I can receive from my healthcare FSA?
Your full healthcare FSA annual election amount will be available at any time during the plan year, reduced by the amount of previous healthcare reimbursements received during the year.What are qualified expenses under a healthcare FSA?
Qualified expenses must be for out-of-pocket medical care provided to you, your spouse or dependent. Code § 213(d)(1)(A) and (B) define medical care as amounts paid for:- The diagnosis, cure, mitigation, treatment or prevention of disease, or for the purpose of affecting any structure or function of the body; and
- Transportation primarily for and essential to medical care as defined above.
Typically, out-of-pocket expenses such as co-payments and deductibles under your major medical plan, eye exams, prescription drugs, contact lenses and laser eye surgery are eligible under a healthcare FSA. Click for a list of eligible expenses.
Over-the-counter medications used to treat a specific medical condition, including antihistamines, allergy medications and cold medicine also are qualified expenses under your healthcare FSA. Click for a list of eligible over-the-counter medications.
Please note the following:
- Expenses reimbursed under your healthcare FSA may not be reimbursed under any other plan or program. Only your out-of-pocket expenses are eligible.
- Expenses must be incurred during the period of coverage. As outlined in Prop. Treas. Reg. § 1.125-2, Q/A-7(b)(6), "expenses are treated as having been incurred when the participant is provided with the medical care that gives rise to the medical expenses, and not when the participant is formally billed or charged for, or pays for the medical care." Therefore, the date of service must be within the current plan year.
- Expenses reimbursed under a healthcare FSA may not be used to claim any federal income tax deduction or credit.
What expenses are ineligible under a healthcare FSA?
Ineligible expenses include the following:- Cosmetic surgery and procedures
- Expenses for services rendered outside the coverage period
- Expenses reimbursed by an insurance provider or another health plan
- Herbs/Vitamins/Supplements/OTC medications used for general health
- Insurance Premiums
- Family or Marriage Counseling
- Personal Use Items (e.g., toothpaste, shaving cream, cosmetics)
- Dental Whitening
This list is not all-inclusive. If you have questions regarding whether an expense is eligible or ineligible under a healthcare FSA, please call your HR department or CONEXIS.
Why wasn't my orthodontia claim paid in full?
Services associated with orthodontia generally are provided over an extended period of time and often are impossible to match with actual costs. As a result, orthodontic expenses are handled a bit differently than any other type of healthcare expense. The two reimbursement methods used for orthodontic expenses are as follows:- 1. "As paid" Approach -You may be reimbursed for orthodontic expenses considered "incurred" in the current plan year, as long as your claim is accompanied by a treatment plan or itemized statement and proof of payment. The documentation must include the treatment start date and anticipated treatment end date. To calculate the amount incurred in the current plan year, the entire contract amount should be divided by total number of months of treatment and multiplied by the number of months in the current plan year. Expenses will not be reimbursed automatically in subsequent plan years. Therefore, you must submit a claim form and appropriate documentation for each plan year during the course of treatment. Please note you may not be reimbursed for the full amount of the orthodontic contract even if the entire bill is paid up front.
- 2. "Pro-rata" Approach - You may be reimbursed for the initial payment usually associated with banding fees. Thereafter, you may file a monthly claim for the monthly payment amount. Please note a treatment plan or itemized statement is required with the initial contract/banding claim. The documentation should include the amount of the initial down payment (usually associated with banding fees), the treatment start date and anticipated treatment end date.
How often are reimbursements made?
Claims are reimbursed on the schedule chosen by your employer. For more information regarding the reimbursement schedule chosen by your employer, please contact your HR department or CONEXIS.What do I need to submit in addition to a reimbursement form? A signed and dated claim form should be accompanied by one of the following:
- An Explanation of Benefits (EOB) from your insurance carrier showing the date of service and your out-of-pocket expense(s). If the EOB indicates the procedure is not covered by your health insurance plan, you may be required to submit an itemized statement from the provider.
- For expenses not covered by insurance, an itemized statement from the service provider. The itemized statement should include the patient's name, date(s) of service, procedure description(s), provider name and the charge(s) for the service.. Account balance statements, balance forward statements, cancelled checks, cash register receipts and credit card receipts are not acceptable third-party documentation (see below for special rule regarding cash register receipts for eligible over-the-counter medications). In some cases, a letter of medical necessity from a medical practitioner may be required.
- For prescription drugs, a pharmacy statement including the name of the pharmacy, patient's name, date of fill, patient's cost, Rx number and name of the drug.
- An itemized cash register receipt for eligible over-the-counter medications. The name of the medication and the purchase date should be reflected on the receipt. Please note "dual-purpose" over-the-counter medications will not be reimbursable without further substantiation of the medical condition being treated (i.e., a letter of medical necessity from a medical practitioner) as these items have both a medical purpose and a general health/personal/cosmetic purpose.
What if I use my stored value card to pay for eligible medical expenses? Will I still be required to submit documentation?
The required documentation for purchases made with your stored value card is the same information required for traditional paper claims. You should retain copies of all itemized receipts for each card transaction. To comply with IRS requirements, appropriate documentation must be provided to CONEXIS upon request. Appropriate documentation includes your insurance plan's Explanation of Benefit (EOB) statement or an itemized receipt or bill from the provider including the patient's name, a description of the service, the original date of service and your portion of the charge. An itemized cash register receipt with the merchant name, name of the item/product, date and amount is acceptable for a limited number of qualified expenses to include over-the-counter medications, hearing aid batteries and contact lens solutions. For prescription drugs, please submit a pharmacy statement or a printout from your pharmacy including the patient's name, the prescribing physician, the RX number, name of the drug, date the RX was filled and the co-payment amount. Credit card receipts, cancelled checks and balance forward statements most often do not meet the requirements for acceptable documentation. For more information on stored value cards, click here (provide link to debit card FAQs).Where do I submit my claims?
CONEXIS provides three methods of claim submission:- Submit your claim through the Participant web site at My CONEXIS. You must have access to a scanner to use this method, or
- Fax your claim (please check with your local Client Services Representative (CSR) for our toll-free number).
- Mail your claim (please check with your local CSR for the correct mailing address).
Is there a deadline for submitting claims?
Your employer has established a time period after the end of a plan year to file claims incurred during the plan year. After that, any unused dollars are forfeited. To verify the time limit for filing claims, please refer to your summary plan description or contact your HR department or CONEXIS.How do I keep track of my account balance(s)?
Your account balance(s) is available 24/7 at My CONEXIS In addition, every time a payment is made from your account you will receive an Explanation of Benefits (EOB) with your current account balance(s). CONEXIS also will send a quarterly statement to you with a complete summary of your account balance(s).Why wasn't my orthodontia claim paid in full?
Your election is irrevocable for the plan year unless you have a change in status or other qualified event as defined in the IRS Regulations and your employer's plan permits such qualified changes. Qualified changes in status include:- A change in marital status (such as marriage, divorce or death of your spouse)
- A change in the number of your dependents (such as birth or adoption of a child, or death of a dependent)
- A change in employment status of you, your spouse or dependent
- An event that causes your dependent to satisfy or cease to satisfy an eligibility requirement for a particular benefit • A change in residence of you, your spouse or dependent
Your requested change must be on account of and consistent with the event. In general, the change in status must affect eligibility for the coverage. In other words, there are two parts to determining if a change in election should be permitted.First, you must experience a change in status or other qualified event. Second, your requested change must be consistent with the event. Please see your summary plan description for more information regarding other qualified changes and consistency requirements and exceptions that may apply.
The information above is provided under the assumption your employer's plan allows all changes permitted under the IRS Regulations. An employer can restrict mid-year election changes through plan design. Please see your summary plan description for specific rules governing your plan.
If you experience a change in status or other qualified event, please contact your HR representative to obtain the appropriate paperwork for completion.