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General

What is a flexible benefit plan?

Flexible Spending Accounts provide a tax-advantaged way to pay certain out-of-pocket health care expenses, and work-related dependent care expenses. The plans allow you to pay your expenses with "pre-tax" dollars, which means that you get a tax deduction for these expenses before you ever file your tax return. You don't pay Federal Income or Social Security taxes on this money and, in most states, State tax is exempt.

Most employer plans include three options:

Pretax Premium Only Plan
With the Premium Only Plan you can pay for your insurance premiums on a pretax basis.
Medical Spending Account
You can choose to have a certain amount of dollars set aside on a pretax basis to pay for qualifying out-of-pocket health care, dental, vision or hearing expenses that are not covered under your existing insurance plans.
Dependent Care Account
A Certain amount of dollars can be set aside on a pretax basis to pay for qualifying work-related child or adult daycare expenses.

How do the spending accounts work?

You decide which type of accounts you want to use; the Medical Care and/or the Dependent Care account. This is how it works:

You decide how much you will spend for out of pocket medical and/or your Dependent Care account in the next year.
The amounts you set aside into your accounts will be withheld from your paycheck (on a pretax basis) each pay period on a schedule established by your employer.
As you incur qualified medical care expenses or dependent care expenses throughout your plan year, you submit a claim form along with documentation of your expenses, and are then reimbursed from your accounts. You may choose to be reimbursed by check, direct deposit or through your Convenience Card.

Because this is an IRS governed plan there are specific rules you need to be aware of. You must make your election decision before the new plan year begins each year, or before your effective date if you are newly eligible. The election decision remains in effect for the plan year, unless you have a Qualifying Life Event or status change, such as a marriage, birth, death of a dependent, etc. (Check your employer plan provisions as they may be more restrictive.) Any funds left in your account at the end of the year are forfeited. Be conservative and plan only for predictable expenses.

How will I save money by using the flexible spending accounts?

You can save on Federal Income and State taxes (in most states), and Social Security taxes. Federal taxes generally are 15% to 28%, with Social Security taxes of 7.65%. Adding these amounts to your state tax will generally bring the savings to at least 30%, and more in some cases.

Filing Claims

What does "expense incurred" mean?

IRS regulations explain that the expense must be incurred before it can be reimbursed within a plan year. The IRS definition of "expense incurred" is as follows:

Expenses are treated as having been incurred when you are provided with the medical care or dependent care that gives rise to the expense, and not when you are formally billed or charged for, or pay for the expense.

What happens if I forget to sign my claim form?

When we receive an unsigned claim form we attempt to reach you by phone or fax so we can process the claim as quickly as possible. If unsuccessful, we send the claim back for your signature.

IRS regulations require that you sign a statement explaining the expenses in question have not been reimbursed, and are not reimbursable elsewhere. The statement is included on the claim form and must be signed by you as the plan participant.

My Cafeteria Plan runs on a calendar plan year. If I order eyeglasses December 26 and pick them up on January 5, will this be a December claim or a January claim?

Claims are processed based on the date of service, or the date the order was placed that gave rise to the expense. This would be a December claim.

Is a cancelled check sufficient documentation for my claim?

No. A cancelled check cannot be used as documentation for your claim. You will have to provide actual receipts from the service provider.

How long after the end of the plan year can I still file claims?

The Employer decides how long a run-off period will be for you to turn in claims. (typically 90 days.)

Changes to My Elections

I made my election and two months later I realize that I made a mistake in my election. How can I make corrections?

You can't. Once your election is made it can't be changed for that plan year unless you have a status change or Qualifying Life Event such as marriage, divorce, birth, death, etc.

Can I transfer funds from my Dependent Care account to my Health Care account?

No. Each account is maintained separately and funds cannot be transferred between accounts.

Health Care

Is corrective eye surgery (LASIK, Radial Keratotomy) eligible for reimbursement?

Yes. You want to make sure you are a candidate for the surgery before funding it in your account because if for any reason you can't have the surgery in the Plan Year, you will not be allowed to lower your election.

Is massage therapy eligible?

Massage therapy may be eligible in cases where there is a specific injury or trauma being treated, and your attending physician prescribes the treatment as medically necessary. Massage therapy is not eligible for treatment of stress or depression.

How are orthodontia expenses reimbursed under the flex plan?

The IRS recognizes that orthodontia treatment is different from any other type of medical care expense. Orthodontia is the only health reimbursement that goes by the date of payment. Therefore, reimbursement of orthodontia expenses can be handled in these two ways:

Coupon Payment Option - You can submit an itemized statement of your orthodontia expenses as the service is provided. Submit this documentation with a completed claim form for reimbursement.
Total Payment Option - If you paid the entire amount of treatment when the service began, attach to the claim form a copy of your paid receipt, along with an itemized statement showing the provider name, patient name, date treatment started, dollar amount and amount insurance will pay. Under this option, you can only file for this expense once. You cannot submit this expense again in future plan years.

Is teeth whitening an eligible expense?

No. Teeth whitening is considered a cosmetic treatment and therefore is not eligible.

Can I be reimbursed for a stop smoking program?

Yes. Prescription medicines (including hypnosis) are eligible. Stop smoking gum and medicines you can purchase over-the-counter are now eligible.

Can health insurance premiums be paid through my medical care Flexible Spending Account (FSA)?

No. Insurance premiums are not an eligible expense under IRS Section 125 Medical Care Flexible Spending Accounts.

I elected to contribute $100 per month, up to $1,200 for the medical care Flexible Spending Account (FSA) for the calendar plan year. If I have $100 in my account in January, but incur a $300 expense, how much can I be reimbursed?

The Medical Care Flexible Spending Account (FSA) will reimburse you $300. Your annual election amount is available to you the first day of the plan year. You do not have to have the funds in the account in order to be reimbursed.

What happens to my account upon termination of employment?

Your eligibility period to incur expenses will end when you terminate employment.

Are health club membership fees/dues eligible if my physician prescribes this to treat a medical condition?

No. With respect to regular membership dues but fees paid for specific services (such as on a per-session basis) at a health club might be eligible if the individual is under a physician's care for a specific medical condition, and the physician prescribed the session as medically necessary to treat that condition (e.g., rehab after back surgery). It is the health club membership dues/fees themselves that are not eligible under any circumstances.

Dependent Care (Child or Adult Daycare)

What is the maximum I can claim for Dependent Care?

Maximum amounts for dependent care is set by IRS Regulations. If you are married, filing jointly, you may claim $5,000 per year. The limit is $2,500 if employee is married but filing separately.

My enroller tells me my dependent daycare expenses must be "work-related". What exactly does that mean?

The expenses must be incurred to enable you (and your spouse if married) to be gainfully employed.

My 16-year-old daughter cares for my 8-year-old son after school. Can I pay my daughter and file those expenses through my flex plan?

No. You can count work-related payments you make to relatives only if they are not your dependents. Do not count any amounts you pay to:

A dependent for whom you (or your spouse) can claim an exemption.
Your child who is under age 19 at the end of the year, even if he or she is not your dependent.

Can I file dependent care claims at the beginning of the month for that month?

Service has to be provided before you can file claims regardless of when you pay for the service. Claims filed prior to the date of service will be denied.

Over-The-Counter Drugs

What over-the-counter medicines are FSA eligible?

Over the counter drugs such as allergy and cold medications and pain relievers such as aspirin and antacids, are eligible. Items such as vitamins and dietary supplements that are used for general good health are not included. Learn More...

When can I start being reimbursed for over the counter drug purchases?

Beginning September 4, 2003, expenses incurred for over-the counter medications and drugs can be submitted for reimbursement during the remainder of your current plan year.

Can I increase my current FSA election now to take advantage of this new decision?

No. However, you should consider making changes to your next election to include over the counter drug purchases.

What type of expense substantiation is required?

You must submit a claim form with an attached itemized cash register receipt.

Will I need a prescription or a physician’s medical necessity form?

In most cases, No. However there are some exceptions that require further substantiation material. Please refer to our Over-The Counter eligibility page or call your Section 125 administrator.

Flex Stored Value Card

What is a Flex Stored Value Card?

The Flex Stored Value Card is a debit card that functions just like a major credit card. The Flex Stored Value Card is limited to use at health care providers. The Card is preloaded with a value equal to your annual FSA benefit. When you incur a medical expense, simply swipe your Flex Stored Value Card just like you would a credit card. There is no need to file a claim and wait for reimbursement.

How do I use my Flex Stored Value Card?

Your Flex Stored Value Card is loaded with the entire amount of your annual election so that you can begin using it right away for medical expenses. Simply pay for your medical expenses at the point of sale with your Card. You will not be paying out of pocket, therefore you will no longer need to fill out claim forms and wait for reimbursement!

What do I have to do to get the Flex Stored Value Card?

Simply make an election and complete the FSA enrollment forms. If your employer elects to provide a stored value card option, you will automatically receive your Flex Stored Value Card in the mail.

What if my medical expense is more than I elected?

Your stored value card charge will be denied if it is being 'swiped' for MORE than what you elected. Therefore, you will have to pay the difference out of pocket (with taxed income). You may consider electing MORE for the following plan year.

What if I go to a discount store or supermarket to buy my prescriptions and get my eye exams? How does SDSA know what I'm buying?

Our system is set up to FLAG any transactions that DON'T correspond to your health plan co-pays. Therefore, you may be asked to submit a receipt/claim form AFTER you made the purchase so that we can substantiate your claim. SO BE SURE TO SAVE ALL OF YOUR RECEIPTS! WE'LL LET YOU KNOW WHEN WE NEED THEM!

What happens if my receipt shows I accidentally used the card for an ineligible expense?

Your FSA 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. You will be notified by your administrator if that should happen and your card may be deactivated until your account is reimbursed.

Is there an extra fee involved?

Yes. The service charge varies but is normally around $30 per year. Arrangements can be different - please check with your HR department or give us a call to find out what your cost of participation would be.

Frequently Asked Questions (FAQ)...