This information is provided as a service for clients of WC Administrators. Some of these answers may be plan specific and will not apply to plans not administered to plans not administered by WC Administrators, LLC.
Who is covered by my Health Flexible Spending Account?
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Who is covered by my Health Flexible Spending Account?
Your Health FSA covers you, your spouse, and your legal dependents as per tax Code Section 105(b).
If the Plan Administrator receives a qualified medical child support order (QMCSO) relating to the Health FSA, the Health FSA will provide the health benefit coverage specified in the order to the person or persons ("alternate recipients") named in the order to the extent the QMCSO does not require coverage the Health FSA does not otherwise provide. "Alternate recipients" include any child of the participant who the Plan is required to cover pursuant to a QMCSO. A "medical child support order" is a legal judgment, decree, or order relating to medical child support. A medical child support order is a QMCSO to the extent it satisfies certain conditions required by law. Before providing any coverage to an alternate recipient, the Plan Administrator must determine whether the medical child support order is a QMCSO.
How is my Account funded?
On your Election form, you specify the annual amount of Health Care Reimbursement costs you wish to pay for. An equal portion of this annual amount will be deducted from each of your paychecks during the Plan year and put into your Account. If you prefer, you may indicate the amount(s) you want taken from your paycheck, as long as the Annual Election stays within your plan's limits.
What amounts will be available for payment at any particular time during the plan year?
So long as coverage is effective, the full, annual amount of Health Care Reimbursement you have elected, minus the amount or payments you have already received during the Year, will be available at any time during the Plan Year, without regard to how much you have contributed.
How do I receive reimbursements under the Health FSA?
You must submit a claim in order to be reimbursed. Please see our Frequently Asked Questons about Cafeteria Claims for more information
What is an "Eligible Medical Expense?"
An "Eligible Medical Expense" is an expense that has been incurred by you and/or your eligible dependents that satisfies the following conditions:
- The expense is for "medical care" as defined by Code Section 213(d);
- The expense has not been reimbursed by any other source and you will not seek reimbursement for the expense from any other source.
The Code generally defines "medical care" as any amounts incurred to diagnose, treat, or prevent a specific medical condition or for purposes of affecting any function or structure of the body.
This includes, but is not limited to, both prescription and over-the-counter drugs (and over-the-counter products and devices).
Not every health related expense you or your eligible dependents incur constitutes an expense for "medical care." For example, an expense is not for "medical care", as that term is defined by the Code, if it is merely for the beneficial health of you and/or your eligible dependents (e.g. vitamins or nutritional supplements that are not taken to treat a specific medical condition) or for cosmetic purposes, unless necessary to correct a deformity arising from illness, injury, or birth defect.
You may, in the discretion of the Plan Service Provider/Plan Administrator, be required to provide additional documentation from a health care provider showing that you have a medical condition and/or the particular item is necessary to treat a medical condition.
Expenses for cosmetic purposes are also not reimbursable unless they are necessary to correct an abnormality caused by illness, injury or birth defect.
"Stockpiling" of over-the-counter drugs and/or items is not permitted and expenses resulting from stockpiling are not reimbursable. There must be a reasonable expectation that such drugs or items could be used during the Plan Year (as determined by the Plan Administrator).
In addition, certain expenses that might otherwise constitute "medical care" as defined by the Code are not reimbursable under any Health FSA (per IRS regulations):
- Health insurance premiums;
- Expenses incurred for qualified long-term care services; and
- Any other expenses that are specifically excluded by the Employer.
Are exercise expenses considered an "Eligible Medical Expense?
According to Tax Code Section 213, “taxpayers may deduct exercise expenses, including the cost of equipment to use in the home, if require to treat an illness (including obesity) diagnosed by a physician.” In this same section, the IRS goes on to explain that the expense must 1) be to treat a disease rather than to promote general health and 2) be an expense that would not have been paid “but for” the disease.
In order to assure that the expense meets these qualifications, WC Administrators requires a prescription from a physician for exercise expenses.
When must the expenses be incurred in order to receive reimbursement?
Eligible Medical Expenses must be incurred during the Plan Year and while you are a participant in the Plan. "Incurred" means that the service or treatment giving rise to the expense has been provided. If you pay for an expense before you are provided the service or treatment, the expense may not be reimbursed until you have been provided the service or treatment. You may not be reimbursed for any expenses arising before the Health FSA becomes effective, before your Salary Reduction Agreement or Election Form becomes effective, or for any expenses incurred after the close of the Plan Year, or, after a separation from service or loss of eligibility (except for expenses incurred during an applicable COBRA continuation period).
If the Employer has adopted a grace period, you may also be able to use amounts allocated to the Health FSA that are unused at the end of the Plan Year for expenses incurred during the grace period following the end of the Plan Year.
What if my medical expenses for the plan year are less than the amount I have contributed?
Under the Federal tax law, unused amounts credit to your account as of the end of the Plan Year (less any claims submitted during a grace period) will be forfeited after the grace period. Forfeited amounts will be used to offset administrative expenses and future costs, and/or applied in a manner that is consistent with applicable rules and regulations (per the Plan Administrator's sole discretion). No amount may be paid to you except in reimbursing eligible medical claims.
If the Employer has adopted a grace period following the end of the Plan Year, amounts allocated to the Health FSA that are unused at the end of the Plan Year may also be used to reimburse expenses incurred during the grace period following the end of the Plan Year. Any amounts not used for expenses incurred during the Plan Year and during the grace period will be forfeited.
Will my health information be kept confidential?
Under the Health Insurance Portability and Accountability Act of 1996 ("HIPAA") group health plans such as the Health FSA and the third party service providers are required to take steps to ensure that certain "protected health information" is kept confidential.