personal risk services flexible spending accounts __________________________________________ union...
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Personal Risk Services
Flexible Spending Accounts__________________________________________
Union College
September 6, 2005
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
Examples of acceptableOTC’s
Aspirin/Tylenol
Contact solution
Ace bandages
Pepcid AC
Cold medications (children/adult)
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.