Personal Risk Services Flexible Spending Accounts __________________________________________
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Transcript of Personal Risk Services Flexible Spending Accounts __________________________________________
Personal Risk Services
Flexible Spending Accounts__________________________________________
Union College
September 6, 2005
A Closer Look
At
Flexible Spending Accounts (FSA’s)
What is an FSA?
• Flexible Spending Account• Allows employees to set aside pre-tax dollars to
pay for medical and dependent care expenses.• Gives participating employees and employers a
tax break
How does it work?• Employee decides how much salary to
set aside for either un-reimbursed medical or dependent care expenses.
• Medical and dependent care are two separate elections.
• The amount is deducted from the paycheck.
• When out-of-pocket expenses have been paid, a reimbursement is made.
Un-reimbursed Medical Expenses:• Office visit co-pays• Co-insurance/deductibles• Prescriptions• Employer sets maximum to withhold
Advantages of participatingIn an FSA
Dependent Care Expenses:• Day care and after care for a child under the age of 13• Care for a disabled spouse or dependent incapable of caring for himself.• Summer camp (day or overnight)• Federal limit of $5,000
Advantages of participatingIn an FSA
Estimation Error – An employee may over or underestimate their expenses for the year.
“Use it or Lose It Rule” – Under regulations issued two decades ago, employees forfeited any unused balances their FSA accounts at the end of a plan year.
However, this rule has been eased effective May 18, 2005. The new regulation allows a 2 ½ month (75 days) grace period at the end of a plan year …extending the time frame for an employee to use money left over at June 30.
Irrevocable Election Rule - which prohibits modification to an election during the plan year unless there is a qualifying event in status.
Any Disadvantages of participatingIn an FSA?
Examples of Ineligible Expenses(Section 105)
Un-reimbursed Medical:• Weight loss programs• Health Club fees…swimming lessons• Dancing lessons• Insurance premiums
Dependent care:• Cost of food, clothing and tuition• Cost of babysitting fees by local teenage• Cost of transportation to place where dependent care is given
Effective
July 1, 2005
The FSA allows
OTC’s
(over-the-counter medicines & products)
Examples of acceptableOTC’s
Aspirin/Tylenol
Contact solution
Ace bandages
Pepcid AC
Cold medications (children/adult)
Examples of non-acceptableOTC’s
Deodorant
Shampoo
Toothpaste/toothbrush
Make-up
Soaps & lotions
How are FSA claims paid?If there is a medical, dental, or vision claim, the ARM claims system will automatically pay to you any co-pay or co-insurance amounts.
This is done in a weekly “sweep”. Checks are run bi-weekly.
If the claims are co-pays for Rx expense or an OTC, a claim form with receipt must be submitted for reimbursement.
Claim Forms
A claim form is only required if:
- the provider is unable to bill ARM directly
- the expense is for Rx
- the expense is for OTC items
Forms can be obtained from our website at www.adventistrisk.org or from your HR dept.
Thank you!