Personal Risk Services Flexible Spending Accounts __________________________________________ Union College September 6, 2005 - PowerPoint PPT Presentation

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Personal Risk Services Flexible Spending Accounts __________________________________________ Union College September 6, 2005 A Closer Look At Flexible Spending Accounts (FSA’s) What is an FSA? F lexible S pending A ccount

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Personal Risk Services Flexible Spending Accounts __________________________________________ Union College September 6, 2005

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Personal Risk Services

Flexible Spending Accounts

__________________________________________

Union College

September 6, 2005


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A Closer Look

At

Flexible Spending Accounts (FSA’s)


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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


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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.


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Advantages of participating

In an FSA

  • Un-reimbursed Medical Expenses:

    • Office visit co-pays

    • Co-insurance/deductibles

    • Prescriptions

    • Employer sets maximum to withhold


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Advantages of participating

In 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


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Any Disadvantages of participating

In 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.


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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 Ineligible Expenses(Section 105)


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Effective

July 1, 2005

The FSA allows

OTC’s

(over-the-counter medicines & products)


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Aspirin/Tylenol

Contact solution

Ace bandages

Pepcid AC

Cold medications (children/adult)

Examples of acceptableOTC’s


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Deodorant

Shampoo

Toothpaste/toothbrush

Make-up

Soaps & lotions

Examples of non-acceptableOTC’s


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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.


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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.

Claim Forms


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Thank you!


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