What Is A Health Care Flexible Spending Account (FSA)?
A Health Care FSA is a special reimbursement arrangement established by employers to allow you as an employee to set aside pre-tax money on an annual basis to pay for qualified medical expenses (as defined in Code Section 213(d)) incurred during that year. FSAs can be offered in conjunction with any type of health plan. Your pay is automatically reduced each pay period based on your annual election; however, the full annual election amount is available to you on the first day of coverage. The Health Care FSA is subject to the “use it or lose it” provision which means any unused contributions remaining at the end of the plan year (or following the grace period, if adopted by the employer) will be forfeited.
What is a Dependent Care (Daycare) FSA?
A Dependent Care Flexible Spending Account is an employer-sponsored benefit plan that lets you as an employee set aside pre-tax money on an annual basis to pay for qualified day care expenses incurred during that year. You decide how much you want to set aside each year, and a portion of that amount is deducted from each paycheck during the year. You can then submit a reimbursement request for eligible dependent care expenses. There is a statutory annual maximum contribution of $5,000 ($2,500 if married and filing separate returns) established by the IRS. Unlike the Health Care FSA, reimbursements may only be made up to the available balance as of the date the reimbursement request is made.
What is a Limited-Purpose FSA?
The IRS allows employers that offer a High-Deductible Health Plan (HDHP) and Health Savings Account (HSA) to also offer a Limited-Purpose FSA. A Limited-Purpose FSA works the same way a Health Care FSA by letting you as an employee set aside pre-tax money on an annual basis to pay for qualified expenses incurred during that year. The difference is that it limits what expenses are eligible for reimbursement. In a Limited-Purpose FSA you can only submit claims for eligible vision and dental expenses. (Remember: Cosmetic procedures such as teeth bleaching are not eligible under any Flexible Spending Accounts.)
Can I transfer an account balance from one account to the other?
No, the Health Care, Limited-Purpose and Dependent Care FSAs are separate plans offered by your employer under separate terms and conditions.
What are the tax advantages of an FSA?
Dollars you contribute to your Health Care and/or Dependent Care FSA are taken before taxes are levied against your income. Your contributions are subtracted from your gross salary and then taxes are withheld from your adjusted gross. The amount you deposit into any FSA will not have Federal Income and Social Security taxes deducted, but could have state and local taxes withheld. Please note: The amounts you contribute to a Health Care, Dependent Care or Limited-Purpose FSA cannot be taken as a tax credit on your Federal Income Tax Return, since they have already received tax advantages.
Who do I call for questions about my FSA?
If you have questions about how an FSA from BlueCross BlueShield of Tennessee works, our Consumer Coaches are ready to help. Just call 1-800-527-9206 or e-mail ConsumerCoach@BCBST.com for assistance. If you already have a BlueCross BlueShield FSA, you can call customer service at 1-800-565-9140 for assistance.
Can I go online to check my account activity?
Yes, log on to BlueAccess via BCBST.com to view your account balance, claims activity and your Personal Health Statement.
How often can I submit reimbursement requests?
You can submit requests as often as you incur expenses.
What happens if the amount I request for reimbursement is larger than my available account balance?
Reimbursement requests that exceed your account balance will be reimbursed up to the amount available in the account. Depending on your employer’s schedule for making contributions to your Dependent Care FSA, pended request amounts may be reimbursed if additional contributions are made to your account. Health Care and Limited-Purpose FSAs are reimbursed up to the annual amount available to the employee, per their enrollment election. Please remember that services must have been rendered before they will be reimbursed.
How can I obtain blank reimbursement forms?
Forms are available online.
Can I make changes to my FSA(s)?
Once an election for an FSA has been made, you cannot change the amount unless you terminate employment with your company or there is an appropriate change in status. If you have a qualifying event or family status change, such as a marriage, divorce, birth or adoption, change of job, or loss of a covered dependent, you can change your election amount. Please view your Evidience of Coverage or summary plan description materials for more information.
What happens to the balance in the account(s) at the end of the plan year?
FSAs are subject to a use-it-or-lose it rule so if the funds are not used by the end of the year, you lose that money. Employers do have the choice to give employees a two-and-a-half month grace period immediately following the end of a plan year to use up funds for the year. Thus, if the plan year ends December 31, you may have the ability to use your health FSA funds until March 15 from the previous year.
HEALTH CARE FSA
What medical expenses can be reimbursed from the Health Care FSA?
Employees are reimbursed for “qualified medical expenses.” Qualified medical expenses (list is available after logging in to BlueAccess) are defined by IRS Code Section 213(d), as long as those expenses are not otherwise paid by health insurance. These expenses may include deductibles, coinsurance, prescription drugs, vision care and dental care.
Who controls the use of funds in a Health Care or Limited-Purpose FSA?
Although employees can submit claims for whatever expenses they choose, the employer must require you to provide substantiation of each expense to ensure that it is for a qualified medical expense eligible under the Health Care or Limited-Purpose FSA.
What medical expenses are typically not reimbursable from the Health Care or Limited-Purpose FSA?
If I have a Health Care FSA and a Health Reimbursement Arrangement (HRA) through BlueCross BlueShield of Tennessee, which account will be used first?
The Health Care FSA and HRA, while separate accounts, provide reimbursement of qualified medical expenses as defined by your employer and the IRS (i.e., deductibles, coinsurance, prescription expenses). Should you have both accounts, expenses eligible under both plans will be reimbursed through the HRA first, then default to the FSA, The HRA will pay first, unless your employer specifies that the FSA will pay prior to the HRA. One reason to have the FSA pay first is because unused FSA money does not carry over.
Can I have both a Health Savings Account (HSA) and an FSA?
Federal regulations prohibit employees from participating in both a Health Savings Account (HSA) and a traditional Health Care FSA concurrently. Employers may add a Limited-Purpose FSA for HSA-Compatible High-Deductible Health Plan (HDHP) participants, which limits FSA reimbursements to dental and vision expenses only.
Can I be reimbursed for my dependents’ medical expenses under the FSA?
Yes, as long as your dependent meets the definition of a dependent as defined by the IRS and is included in your employer’s plan.
How soon after enrollment can I request reimbursement from my FSA?
You have access to the full annual amount elected for the Health Care or Limited-Purpose FSA when your plan becomes effective. Services must be rendered on or after the effective date of the plan, before they are reimbursed.
Why was I limited on the amount I could contribute to the Health Care FSA when I enrolled?
It is customary for employers to establish a maximum that you can contribute to the Health Care or Limited-Purpose FSA, since the entire amount is available at the beginning of the plan year.
What is Automatic Reimbursement?
Automatic reimbursement is a feature of our Health Care and Limited-Purpose FSAs that eliminates paperwork for you. Automatic reimbursement is an automated process that submits the liability portion of your health care claims and automatically processes it against your available FSA funds. If funds are available, a weekly reimbursement check is then sent to you. You do have the option to turn off automatic reimbursement and manually submit claim forms with receipts for reimbursement for Health Care and Limited-Purpose FSAs. For Dependent Care FSAs, you are required to file a claim form for reimbursement.
How do I submit a paper (manual) request for reimbursement?
Requests can be made using a Health Care Reimbursement Claim Form. Simply complete and sign the claim form and attach one of the following:
Completed reimbursement requests should be sent to:
BlueCross BlueShield of Tennessee
Claims Service Center
PO Box 180150
Chattanooga, TN 37401-7150
What is an FSA debit card?
The debit card with access to an FSA is a convenient option your employer may offer to you. The debit card allows you to access the funds in your account without having to complete and file forms. You can use the card whenever you incur an eligible expense at a qualified provider (such as an office visit copay or a prescription at a pharmacy). You can pay with your debit card instead of paying from your wallet and waiting for reimbursement later from your FSA.
What do I need to do to receive the debit card?
If your employer offers its employees the option of a debit card, you will automatically receive a debit card and will not need to complete additional paperwork.
How does the debit card work?
When you incur an eligible expense at a qualified provider (such as an office visit copay or a prescription at a pharmacy), you can pay with your debit card instead of paying from your wallet now and waiting for reimbursement later. You can use the debit card at merchants and health care providers that accept MasterCard® and are providers of qualified medical services. Use it for expenses such as office visit copays, hospital deductibles, prescription copays, and other services that may be eligible under your health plan. It’s important to remember that the payment must be for eligible products or services that are reimbursable under your course.
Do I still need to keep my receipts and documentation for prescriptions and office visits, plus the Explanation of Benefits that are sent to me?
Yes. Throughout the year, you should keep your original receipts and documentation for prescriptions and health-related expenses for all transactions (including debit card transactions), so you’ll have them if needed to verify a claim. The IRS requires that all transactions are validated, including the debit card transactions. In most cases involving debit card transactions, the electronic data we already have will be sufficient to accommodate this requirement. If we do not have the electronic data or if the transaction cannot be validated, we’ll contact you and you’ll be asked to provide documentation with receipts. Make sure you respond promptly to a request for receipts. Failure to do so can result in the expense being labeled as ‘ineligible,’ in which case, you would be obligated to reimburse your account. Failure to respond promptly can also result in deactivation of your debit card.
What happens if my receipt shows I accidentally used the debit card for an ineligible expense?
Your account can be used for eligible medical expenses only and you are responsible for reimbursing your account if the card is used either accidentally or intentionally for an ineligible expense. Any items you pick up at the pharmacy while you’re waiting for your prescription to be filled that are not qualified expenses (e.g., magazines, snacks, toothbrushes, etc.) cannot be paid for with your debit card. You must use a different method of payment for these types of purchases—don’t use your debit card. Your administrator will notify you if any ineligible purchases are made with your debit card, and your card may be deactivated until your account is reimbursed. Whether you are contacted or not, you will be required to pay back the money to your account.
Am I able to use my debit card to pay for over-the-counter medicines?
While you can use your debit card to pay for some over-the-counter medicines, please keep in mind that you may be asked to submit receipts and documentation for these purchases. The Internal Revenue Service (IRS) has changed the law to cover some over-the-counter drugs, including antacids, allergy medicines, pain relievers and cold medicines. For the exact list of what is covered, please see the list of qualified medical expenses after signing into BlueAccess.
What if I owe my provider more than I have available in my account?
The card will be declined if ‘swiped ’ for more than your available balance. Simply ask your provider to ‘swipe ’ the card for your available balance and pay the difference out-of-pocket. Another option would be to pay the amount yourself and submit a reimbursement request with your receipt to the address provided on the claim reimbursement form.
What if I don’t owe anything when I’m at my doctor’s office, but I get a bill later?
You can still use the card to pay the bill by writing your debit card number on the invoice and mailing it in, or by providing the card information over the phone to the physician’s office.
Are all of my family members able to use the debit card to pay for their health care expenses?
You are provided a debit card with your name personalized on it. Only the individual whose name is on the card can use the card when making a health care related purchase, but the purchase can be for anyone covered under your plan.
Since it’s a MasterCard®, can I use my debit card like a traditional credit card?
The card only allows processing of health care expenses reimbursed through your program and only accepts transactions using providers of authorized services.
Am I able to put more money into my account once I use all the funds available through my debit card?
No. Once the account is depleted, you won’t be able to use the debit card and you’ll be responsible for paying for any additional out-of-pocket costs.
What happens if my debit card is lost or stolen?
If your card is lost or stolen, report it as soon as possible by contacting us by phone at 1-800-565-9140. A replacement card will be sent to you.
Am I still able to access the funds in my account without the debit card?
Yes, if your provider or merchant does not accept MasterCard® or you choose not to use your debit card, simply pay for your expenses and submit a request for reimbursement claim form along with the receipt for the eligible expense(s) to the address provided.
What do I do if I have used my debit card to pay for expenses that are later reimbursed by my insurance?
It is always better to submit a manual reimbursement request when a medical service is subject to a deductible or coinsurance. If you have mistakenly used your debit card to pay for an expense that is later reimbursed by your insurance, IRS regulations require you to pay the amount back to your account.
Where can I find the “Terms and Conditions ” for use of the debit card?
The “Terms and Conditions ” for use of the debit card are outlined on the Cardholder Agreement that accompanies your debit card. By signing and using the card you agree to use the card in conjunction with those rules.
What happens if my transaction is denied?
After the debit card is ‘swiped’, the system verifies that adequate funds are available in your account and that the expense is from a qualified merchant. If these checks are positive, the funds are then deducted automatically from your account. If these checks are negative, the transaction is denied. If the transaction is denied, then other methods of payment must be used.
What happens to my account(s) if I terminate employment?
You will have a limited period of time to submit additional requests for reimbursement of qualified medical expenses incurred while you were employed, and, at the end of that period, the account balance will be forfeited.
DEPENDENT CARE FSA
What daycare expenses are eligible for reimbursement?
A Dependent Care FSA is used to help pay for nursery school or daycare for younger children, disabled older children, a spouse, an elderly parent or a disabled parent who lives with you full-time. Services must be provided while you and your spouse are working, engaged in a full-time search for employment, or a full-time student. are designated by the IRS.
What daycare expenses are typically not eligible for reimbursement?
Examples of expenses not eligible for reimbursement include payment to relatives providing care, who are also your dependents, or the cost of tuition for children in grade school.
Whose daycare expenses can be reimbursed from my Dependent Care FSA?
A Dependent Care FSA is used to help pay for nursery school or daycare for younger children, disabled older children, a spouse, an elderly parent or a disabled parent who lives with you full-time. Each person must meet the definition of a “qualifying” child or dependent under the IRS Child and Dependent Care Credit guidelines [i.e., an eligible child must be under age 13 (unless disabled and has less than $3,000 gross income) when care was provided and claimed as a dependent on your tax return].
Can I use the Dependent Care FSA to get reimbursed for paying my sister or other relative for babysitting?
Yes. As long as your sister or other relative isn’t listed as a dependent on your income tax return, is 19 or older, and is willing to declare this income on his/her income tax return.
How soon after enrollment can I request reimbursement from the account(s)?
You have access to the account when your plan becomes effective. However, you will only be reimbursed for the balance available at the time of your request. Any unpaid amount will be paid as payroll deductions are credited to your account, up to the annual amount. Services must be rendered before they are reimbursed.
Why was I limited on the amount I could contribute to the account when I enrolled?
The IRS establishes the maximum you can contribute, which is $5,000 per family (if you are head of household or married and file a joint tax return) or $2,500 (if you are married and file a separate tax return).
Why are my reimbursement requests pended when my account shows a spendable balance amount?
With the Dependent Care FSA, you will only be reimbursed for services that have been rendered, up to the amount contributed (i.e. via payroll deduction) to date. Reimbursement requests above the account balance amount will be pended until additional contributions are made to your account and then a reimbursement check will automatically be sent.
How do I submit a request for reimbursement from my Dependent Care FSA?
Complete and sign the Dependent Care portion of the Reimbursement Request form and 1) include your daycare provider’s signature or 2) attach a detailed receipt from your daycare provider. Then send to the BlueCross BlueShield of Tennessee address provided.
Note: A Dependant Care FSA is not eligible for a debit card or automatic reimbursement.
What happens if the amount I request for reimbursement is larger than my available account balance?
Reimbursement requests that exceed your account balance will be reimbursed up to the amount available in the account. With a Dependent Care FSA, the balance or amount available for reimbursement is limited to the amount you have payroll-deducted so far (and your employer contributions, if any). Additionally, services must have been rendered before they will be reimbursed.
Is Automatic Reimbursement a feature available with Dependent Care FSA?
No. This feature is available with Health Care FSAs only.
What happens to my Dependent Daycare FSA if I terminate employment?
You can submit claims for expenses incurred through the last day you worked. You will have until the end of the plan year (usually December 31) or if your employer offers a grace period (3 months following the end of the plan year) to submit these claims.