What is a Healthcare Flexible Spending Account?
A Healthcare Flexible Spending Account (FSA) is a pre-tax benefit account used to pay for eligible medical, dental, and vision care expenses that are not covered by your health insurance plan. The money you contribute to a Healthcare FSA is not subject to payroll taxes, allowing you to pay fewer taxes and take home more of your paycheck.How does a Healthcare FSA work?
You decide how much to contribute to your Healthcare FSA each year, and funds are withdrawn automatically from each paycheck and deposited into your account before taxes are deducted. The total amount you elect to contribute to your Healthcare FSA each year is available on the first day of your plan year.What happens to my Healthcare FSA funds at the end of the year?
It depends on the type of Healthcare FSA program your employer has in place. There are three scenarios for funds that are left unspent in your account at the end of the plan year:What expenses are covered by a Healthcare FSA?
- If you have a Healthcare FSA with Carryover, you can carry over up to $500 into the next plan year.
- If you have a Healthcare FSA with Grace Period, you have up to 2½ months after the end of the plan year to use unspent funds before you lose them.
- If you have a standard Healthcare FSA, you lose any unspent funds at the end of the plan year.
Your Healthcare FSA covers hundreds of eligible healthcare expenses: co-payments for doctor visits, prescription drugs, new eyeglasses or contact lenses, etc. Keep in mind that IRS rules determine which expenses are eligible, and some expenses require a doctor's note or prescription to be eligible for reimbursement under your Healthcare FSA.What expenses are not covered by a Healthcare FSA?
- Cosmetic surgery and procedures
- Dental whitening
- Expenses for healthcare services rendered outside the coverage period
- Expenses reimbursed by an insurance provider or another health plan
- Family or marriage counseling
- Herbs, vitamins, supplements, or other over-the-counter items used for general health
- Insurance premiums
- Personal use items (e.g., toothpaste, shaving cream, cosmetics)
Your Healthcare FSA is funded through your employer. During your company's Open Enrollment period, you tell your employer how much you would like to contribute to your account for the coming year. The maximum amount you can contribute is determined by the IRS. For 2018, it is $2,650. Your employer then deducts your contribution amount (in equal portions) from your paychecks throughout the plan year. However, the entire annual election amount is available to you on the first day of your plan year. Any funds carried over from the previous plan year (up to $500) do not count toward your maximum annual contribution limit, so you could have a balance of up to $3,100.How do I access my Healthcare FSA funds?
There are several ways you can use the funds in your Healthcare FSA:How do I get reimbursed for expenses I pay for directly?
- You can use the Health Benefit Solutions VISA Card associated with your Healthcare FSA to pay for eligible healthcare products and services.
- You can be reimbursed for the eligible expenses you pay out of pocket.
There are three ways to submit a receipt for reimbursement:What happens to my Healthcare FSA funds when I leave my employer?
- Through the Health Benefit Solutions mobile app. Use your mobile device to snap a photo of your receipts and submit them for reimbursement.
- Though your Health Benefit Solutions online account.
- By completing a Health Benefit Solutions FSA Healthcare Expense Claim Form.
Unfortunately, there is no universal answer to this question, because it depends on your employer's Healthcare FSA program. Often employers offer an extended grace period when claims can still be submitted to spend down the remaining funds in your Healthcare FSA. You may also be able to extend the time to use your Healthcare FSA funds if you elect COBRA after you leave your job. Keep in mind that you need to incur all eligible expenses before your last day of work. Please contact your employer for the options available to you.Can I change my election during the plan year?
The election to your Healthcare FSA can be changed if you meet one of these special circumstances determined by the IRS:What is carryover? How do I know if I have carryover associated with my Healthcare FSA?
- A change in marital status (such as marriage, divorce, or death of your spouse)
- A change in the number of your dependents (such as the birth or adoption of a child, or death of a dependent)
- A change in employment status of you, your spouse, or your dependent
- An event that causes your dependent to satisfy or cease to satisfy an eligibility requirement for a specific benefit
- A change in residence of you, your spouse, or your dependent
- A change in coverage cost
The carryover option lets you carry over up to $500 remaining in your account from one plan year to the next. You don’t have to worry about losing money left unspent in your account at the end of the plan year, or the end of a run-out or grace period. A Healthcare FSA with Carryover minimizes your “use it or lose it” risk. To find out if you have a Healthcare FSA with Carryover, please contact your employer.What is a run-out period? How do I know if I have a run-out period associated with my Healthcare FSA?
A run-out period is a timeframe in the new plan year during which you can still file claims for expenses incurred in the previous plan year. This timeframe is established by your employer—not the IRS. While timeframes vary from employer to employer, a 90-day run-out period is common. If your plan year ends on December 31, and you have a 90-day run-out period, you have until March 31 of the following plan year to use money left in your Healthcare FSA. To find out if you have a run-out period associated with your Healthcare FSA, please contact your employer.What is a grace period? How do I know if I have a grace period associated with my Healthcare FSA?
A grace period is a timeframe in the new plan year during which you can incur new expenses and file claims. This timeframe, established by your employer, is up to 2½ months after the end of the plan year. If your plan year ends on December 31, and you have a grace period, you have until March 15 to incur new expenses and use money left in your Healthcare FSA to pay them. To find out if you have a grace period associated with your Healthcare FSA, please contact your employer.