Frequently Asked Questions
Regarding Reimbursement Accounts (Flexible Spending Accounts
- FSA)
QUESTION: What is a
Reimbursement Account?
Reimbursement Accounts (also called Flexible Spending
Accounts or FSAs) are designed to take advantage of Section 125 of the Internal
Revenue Code and let you pay for certain expenses with pre-tax dollars.
These accounts afford you the convenience of setting aside money by payroll
deduction and receiving a tax savings of between 25 and 45 percent on your
out-of-pocket health care and dependent care expenses.
The Health Care Reimbursement Account (HCRA)
allows you to use pre-tax dollars to pay for out-of-pocket medical,
dental, vision, and hearing expenses. The amount you may deposit is determined
by your employer's plan. The Dependent Care Reimbursement Account
(DCRA) lets you pay for up to $5,000 of dependent care expenses with pre-tax
dollars.
Getting maximum advantage out of these accounts
requires an understanding of how they work and some careful planning. Taking
the time to understand them may give you the opportunity for substantial tax
savings.
Because Reimbursement Accounts give you a unique
opportunity to reduce your taxes, certain Internal Revenue Service requirements
apply:
-
Expenses claimed from your account must be incurred during the Plan Year.
-
Money not claimed for the Plan Year will be forfeited - sometimes called the
"Use It or Lose It" Provision. You will have a period of time after
the end of the Plan Year to file claims for services incurred during that year.
This period is usually two to three months.
-
You may not claim any expense reimbursed from this account as an itemized
deduction on your tax return.
-
The amount you contribute to the account must remain the same all year unless
you experience a "qualifying change in status event" and make an
election change.
The Internal Revenue Code requires that the elections
you make during the enrollment period must stay in effect for the entire Plan
Year, unless you experience a "qualifying change in status event".
You can make limited changes in your selections if your status changes for one
of the following reasons:
-
Change in employee’s legal marital status - including marriage, divorce, death
of spouse, legal separation, and annulment.
-
Change in number of dependents - including birth, adoption, placement for
adoption, and death.
-
Change in employment status - including the employment status of the employee,
the employee’s spouse or the employee’s dependent.
-
Dependent satisfies (or ceases to satisfy) dependent eligibility requirements.
-
A significant change in the coverage or the cost of dependent care coverage.
If you experience a "qualifying change in status
event", and you wish to modify your benefit selections, you must notify
your Human Resource department within 30 days of the change.
Your contributions to Flexible Spending Accounts are
not taxed.Pre-tax dollars are exempt from Federal and State income taxes
and Social Security taxes. Using pre-tax dollars saves most employees between
25% and 45% of their share of benefit costs.
[Return To
Top]
QUESTION: What type of
expenses can I claim in my Health Care Reimbursement Account?
As a general rule you can include medical and dental
expenses you, and/or legal dependents, incur during a plan year that are not eligible
for reimbursement from other sources. These expenses include services provided
by Physicians, Surgeons, Specialist, Dentist, and other medical practitioners.
You may also include items such as prescription drugs,
some over the counter medicines and supplies (see
OTC List), artificial limbs,
crutches, wheelchairs, special construction to accommodate the handicapped
person, and a host of other expenses. Our
HCRA Worksheet contains a general list of eligible expenses which, if
not covered by another plan, would be reimbursable. These expenses are eligible
for reimbursement regardless of whether or not you and/or your dependents are
covered by your employers insurance plans. Please refer to
IRS Publication 502 for a detailed explanation of allowed and
disallowed expenses.
[Return To
Top]
QUESTION: Are
there expenses I cannot claim in my Health Care Reimbursement Account?
Yes. A partial list would include the following:
Drugs and Vitamins taken for your general well being, cosmetic surgery, teeth bleaching,
health club expenses, insurance premiums, expenses eligible to be reimbursed
from other sources, illegal procedures and drugs, etc. Please see
IRS Publication 502 for a detailed explanation of allowed and
disallowed expenses.
[Return To
Top]
QUESTION: If my claim is denied, do I have a right to appeal?
You have the right to appeal any claim that has been denied for
any reason. If a claim has been denied you have 180 days from
the denial to file an appeal. To file the appeal you must send a
letter to:
Tri-Star Systems
ATTN: Claims Appeal
14323 South Outer 40 Road, Suite 200 South
Chesterfield, MO 63017
In your
letter please indicate the Employee Name, the claim being
appealed, and any information you can provide on why you think
the claim should be approved.
Your appeal will be reviewed by a supervisor who is
different from and not subordinate to the claims processor who
originally denied the claim.
The law provides that the appeal must be decided within
a period of 60 days, although you should receive a response
within 10 business days of our receipt of the appeal.
If the claim remains denied after the appeal, you will
receive written notification of the reason for the denial and
the plan provisions on which the determination is based. You may
request and receive relevant documents and other information
pertaining to the review. In addition, you will also be notified
of your right to sue if your claim is denied.
[Return To
Top]
QUESTION: How much
should I deposit into a Health Care Reimbursement Account?
We suggest you review the deductible and copay
provisions of your medical and dental plans, and look at your out-of-pocket
healthcare expenses over the past year or two. Then, fill out the
HCRA Worksheet. Many expenses like doctor office visit copays,
orthodontia payments and drug copays are easily predictable. Others, like
eyeglasses and hearing aids may be deferred or accelerated from one year to
another depending on the balance of your account.
Remember, deposits unclaimed are forfeited.
[Return To
Top]
QUESTION: What type of
expenses can I claim in my Dependent Care Reimbursement Account?
Eligible Dependent Care expenses are amounts spent for
the care, well-being and/or protection of a qualified dependent so that you
(and your spouse, if you are married) can work. These types of expenses include
payment to any of the following:
-
Child care/babysitting in your home or someone else's home
-
Day care centers
-
Elder care day care centers
-
Before and after-school care
-
Certain expenses for a live-in, full-time housekeeper for a disabled dependent
-
Preschool expenses, up to but not including kindergarten
-
Summer day camp
You should also make sure that your Dependent Care
expenses meet the requirements listed below:
-
Care rendered at a qualified dependent care center - a facility that provides
care for more than six persons and complies with all state and local licensing
requirements;
-
Care rendered at your home or at the home of another, including care rendered
by a relative, as long as the relative is not your dependent (for whom you are
entitled to a dependency exemption for income tax purposes); or
-
Care for a qualified dependent rendered outside of your home but only if the
dependent regularly spends at least eight (8) hours per day in your home.
Remember, if you are single, your Dependent Care
expenses must be necessary for you to work. If you are married, your Dependent
Care expenses must be necessary for you and your spouse to work, or to be a
full-time student, unless incapacitated.
[Return To
Top]
QUESTION: Are
there expenses I cannot claim in my Dependent Care Reimbursement Account?
Yes. Below are some examples of expenses that are not
reimbursed under your Dependent Care Reimbursement Account:
-
Child care services provided by your spouse, someone you claim as an exemption
on your federal income tax return, or by one of your children under age 19
-
Dependent care expenses you claim as a tax credit on your federal income tax
return
-
Expenses for food, clothing, overnight camp, entertainment
-
Schooling costs for education beginning with kindergarten
-
Expenses for dependent care so that your spouse can perform volunteer work
-
Cost for any person caring for a child (or children) when you or your spouse
are not working
-
Transportation expenses between your home and the dependent care provider,
including chauffeur services
-
Charges for a convalescent nursing home
-
Health care expenses for a dependent
-
Housekeeping expenses not related to dependent care
Please refer to
IRS Publication 503 for additional information.
[Return To
Top]
QUESTION: How much
should I deposit into a Dependent Care Reimbursement Account?
Dependent Care Reimbursement Account deposit limits and
requirements for any Plan Year include:
-
If you are single, or married and filing a joint tax return, you may deposit up
to $5,000 from your combined pay into your DCRA.
-
If you are married and filing a separate tax return, you may deposit a maximum
of $2,500 into your DCRA.
-
If your spouse participates in a dependent care reimbursement account through
his/her employer and you file your tax return jointly, the combined total of
your reimbursements cannot exceed $5,000 each year.
-
Both spouses must be employed (unless one is attending school full-time or
incapable of self-care) and contributions are limited to the income of the
lower paid spouse.
-
The most you can contribute to your account is the amount the lower-paid spouse
earns. If your spouse is a full-time student, or unable to care for himself or
herself, your spouse's income would be considered to be $200 per month ($2,400
each year) if you have one dependent, or $400 ($4,800 each year) if you have
two or more dependents requiring care.
-
Expenses claimed from your account must be incurred while you were eligible
during the Plan Year.
-
Money not claimed for the Plan Year will be forfeited-sometimes called the
"Use It or Lose It" provision. You will have a period of time after
the Plan Year (determined by your employer's particular plan but usually two to
three months) to file claims for services incurred while you were eligible
during that Plan Year.
-
There may be a minimum amount that you can deposit annually into your DCRA.
This amount is determined by your employer's plan.
You must be able to report the name, address and
taxpayer identification number of the provider for the expense to be eligible.
Please refer to IRS
Publication 503 for additional information.
[Return To
Top]
QUESTION: Can I use
the Dependent Care Reimbursement Account and take the Federal Tax Credit?
Yes, but you may not claim the tax credit on the same
expenses reimbursed from Dependent Care Reimbursement Account and amounts
reimbursed from the Dependent Care Reimbursement Account reduce the amounts
eligible for the tax credit. In most cases using the Dependent Care
Reimbursement Account will result in a greater tax savings than taking the tax
credit. You can complete the
DCRA Worksheet to help you determine which is best for you.
[Return To
Top]
QUESTION: How do I
file a Dependent Care Claim?
As you incur eligible dependent care expenses, simply
complete a
FSA Claim
Form, attach supporting documentation that describes the type of
expense, the amount of expense, who was paid and the federal tax ID number (or
Social Security Number in the case of an individual). Mail or fax the claim
form and documentation to Tri-Star at the address/fax number on the claim form.
When you submit a claim for reimbursement from your account, you must include
the social security number or federal tax ID number of the dependent care
provider.
If the expense is eligible, you will receive a
reimbursement check, or direct deposit, and that amount will be deducted from
your account. Reimbursement payments will always be payable to you and may not
be assigned or claimed by your creditors.
Reimbursement from your DCRA is limited to the balance
in your account at the date payments are issued. If there is not enough money
in your account to cover submitted claims, no further reimbursements will be
paid until additional DCRA payroll deductions are deposited into your account.
You can also file your claims On-Line by using
ezFile. ezFile is Tri-Star's priority
on-line claim system that you access on our secure web server.
You can learn more details by reading our
ezFile
Instructions.
[Return To
Top]
QUESTION: How do
I file a Health Care Claim?
When you incur an eligible health care expense, simply
complete an
FSA
Claim Form, attach proof of service documentation (either an insurance
explanation of benefits-EOB, or a bill for service not covered by insurance. If
you are attaching a bill it must identify the patient, show the cost for
service, date of service, and reason for service.). Mail or fax the claim form
and documentation to Tri-Star at the address/fax number on the claim form.
If the expense is eligible, you will receive a
reimbursement check, or direct deposit, and that amount will be deducted from
your account. Reimbursement payments will always be payable to you and may not
be assigned or claimed by your creditors.
The full amount you elect to deposit in your HCRA
during the year is available to you at any time during the plan year.
Claims are processed on a schedule set by your
employer. They are usually processed on every payroll date but may be processed
as often as daily. Check with your plan to see the process schedule.
You can also file your claims On-Line by using
ezFile. ezFile is Tri-Star's priority
on-line claim system that you access on our secure web server.
You can learn more details by reading our
ezFile
Instructions.
[Return To
Top]
QUESTION: When I get
money back after filing a claim, can I have it deposited directly to my bank
account?
If your employer has contracted for Direct Deposit
service you can complete the
Direct Deposit Request Form and return it to us. Your direct deposit
will begin with the first payment that occurs 48 hours after we receive the
completed form.
[Return To
Top]
QUESTION: Can I
have a claim paid directly to a doctor or hospital?
No. When you file a claim the approved payment is paid
directly to you by check or direct deposit.
[Return To
Top] |
