Flexible Spending Accounts A Flexible Spending Account (FSA), also known as a Section 125 Flexible Benefit Plan or Cafeteria Plan is a voluntary, tax-free way for employees to save for qualified medical, dental, vision or dependent care expenses during a plan year. Employees can save between 25 and 50%, depending on their tax bracket. Three ways to save! Premiums employees pay for their employer-sponsored medical, dental or vision plans will automatically be withheld from pay on a pre-tax basis. (No reimbursement required.) Healthcare expenses such as medical, dental and vision expenses that are not paid by insurance. This includes co-pays, deductibles, Lasik eye surgery, orthodontic expenses, chiropractic care and prescription medications. If you and/or your spouse are currently contributing to an HSA, you cannot use the traditional Health FSA. You are able to use the Limited Purpose FSA, which is limited to dental and vision expenses, only. Dependent care expenses for children under age 13 and/or older children or adults who are incapable of self-care. Up to $5,000 (federal limit) per calendar year can be reimbursed through the Dependent Care FSA. How an FSA works Prior to the plan year, employees elect how much they would like to have taken out of their paycheck on a pre-tax basis. Pre-tax simply means before state, federal, Social Security and Medicare taxes are applied. As a result, savings are somewhere between 25 and 50%, depending on tax bracket. Based on employee s election, contributions to their FSAs are automatically deducted from their paycheck over the plan year. The amount of contribution to a Health FSA and Dependent Care FSA should be carefully considered as unused amounts are forfeited at the end of the plan year. As healthcare or dependent care expenses are incurred, employees submit them to Alliance Benefit Group for reimbursement. Alliance Benefit Group is required to substantiate each claim, which involves matching receipts, and explanation of benefits and claim forms to ensure all information has been submitted according to IRS regulations. Alliance Benefit Group reimburses employees by check or direct deposit. Important rules and information about FSAs If an employee does not spend the money they ve elected to have taken out of their check, they forfeit it at the end of the plan year. New elections for the Health and Dependent Care FSA are required every plan year. Once the plan year begins, employees cannot change their elections unless they have a family status change such as marriage, death, divorce, birth or adoption. - 1 -
New employees beginning coverage after the plan year begins can be reimbursed for expenses incurred after their coverage starts. Spouses and all tax dependents are covered and eligible for reimbursement from the FSA, regardless of where they have their medical, dental or vision insurance. IRS Publication 502 is available at www.irs.gov and deals with what expenses are eligible for tax deductibility purposes. IRS Publication 503 is available at www.irs.gov and deals with dependent care expenses. A tax credit is also available for dependent care. Employees should carefully consider which works better for them the tax credit or the Dependent Care FSA. Example of tax savings with FSA Without Plan With Plan Gross Pay $25,000 $25,000 Less FSA Contribution - $0 -$4,000 Taxable Income $25,000 $21,000 Less Taxes (Fed, State, FICA) -$7,162 -$6,016 Less Qualified Medical & Dep Care Expenses -$4,000 -$4,000 FSA Reimbursement +$0 +$4,000 Take Home Pay $13,838 $14,984 Employee saves $1,146 per year!!! Expenses covered by the Health FSA The Health FSA covers expenses that are necessary to treat or alleviate a physical or mental defect or illness. These can be (but are not limited to) clinical, dental, orthodontic, vision, chiropractic or prescription drugs. Dual purpose expenses There are some expenses that may be considered cosmetic or general use items that may also serve a medical purpose. If a doctor recommends a service / item that would not normally be considered medically necessary to treat or alleviate a specific diagnosable medical condition, it is considered a dual-purpose expense. A written statement from the physician must accompany these expenses. This statement must explain what the condition is, what service / item is recommended and how it will alleviate this condition. What to submit with your claim Supporting documentation is required for all expenses that are submitted for reimbursement. This documentation must be itemized, showing date(s) of service and must clearly illustrate the amount you are responsible for paying. If the expense was covered by insurance, the Explanation of Benefits from your insurance provider must be submitted with your claim. Special Rule for HSA Owners If you and/or your spouse are currently contributing to an HSA, or if your employer is contributing to an HSA on your behalf, you are unable to use the Health FSA. Instead, a Limited Purpose FSA, which covers only dental, orthodontic and vision expenses, is available. Limited Purpose = (LP) - 2 -
Covered Health FSA Expenses Acupuncture Fertility Treatment Osteopath Alcoholism Treatment Flu Shots Oxygen Ambulance Glucose Monitoring Devices Physical Exams Artificial Limbs / Teeth LP Guide Dog LP Physical Therapy Bandages Hearing Aids Prescription Drugs Birth Control Pills Home Care Prosthesis Blood Pressure Monitoring Devices Hormone Replacement Therapy Psychiatric Care Body Scan Hospital Services Psychoanalysis Breast Pumps Immunizations Psychologist Chelation (EDTA) Therapy Inclinator Reading Glasses LP Chiropractors Insulin Screening Tests Circumcision Laboratory Fees Sleep Deprivation Treatment Copays / Deductibles Lactation Assistance Supplies Sterilization Procedures Contact Lenses / Related Material LP Laser Eye Surgery LP Supplies for Medical Condition Counseling (excludes marriage) Learning Disability Surgery Crutches Medical Records Charge Therapy Dental Treatment LP Medical Services Transplants Dentures LP Nursing Services Vaccines Diabetic Supplies Obstetrical Expenses Vasectomy Diagnostic Services Occlusal Guards LP Vision Correction LP Drug Treatment Operations Wheelchair Egg Donor Fees Optometrist LP X-Ray Fees Eye Exams / Glasses LP Orthodontia LP Non-Covered Health FSA Expenses Appearance Improvements Electrolysis Over-the-Counter Drugs Baby-Sitting / Child Care Face Lifts Personal Use Items Birthing Classes Funeral Expenses Pre-Payment for Services COBRA Premiums Genetic Testing Retin-A Controlled Substances Hair Removal Rogaine Cosmetics Household Help Safety Glasses Cosmetic Procedures Illegal Operations Student Health Fee Chemical Peels Insurance Premiums Sunglass Clips Dancing Lessons Long-Term Care Tanning Salons / Equipment Diapers Maternity Clothes Teeth Whitening DNA Collection/Storage Medicare Premiums Dual Purpose Health FSA Expenses (requires doctor s letter of medical necessity) Air Purifier Electric Toothbrush LP Orthopedic Inserts Acne Treatment Exercise Equipment / Programs Over-the-Counter Drugs (prescribed) Capital Expenses Glucosamine Prescription Weight Loss Drugs Chondroitin Health Club Dues Special Foods Cryogenic Storage Fees Language Training (for disability) Sunscreen Dietary Supplements Massage Therapy Treadmill Ear Plugs Mattress Varicose Veins Treatment Nutritional Supplements Weight Loss Programs - 3 -
Covered OTC Supplies Bandages Crutches Nebulizers Birth Control Products Denture Supplies LP Ostomy Products Blood Pressure Monitoring Kits Diabetic Supplies Oxygen Equipment Braces / Supports Diagnostic Products Pregnancy Test Kits Canes / Walkers External Catheters Reading Glasses LP Cold / Hot Packs First Aid Supplies Syringes Compression Stockings Hearing Aid Batteries Thermometers Contact Lens Solution LP Hot / Cold Packs Wheelchair & Accessories Corn / Callus Pads Incontinence Supplies Non-Covered OTC Drugs (unless you have a prescription) Important: The following OTC drugs and medicines are eligible only with a prescription. Acid Controllers Cold, Cough & Flu Medicines Ointments / Rash Creams Allergy Medicine Decongestants Pain Relievers / Fever Reducer Anti-Diarrheal Medicine Expectorants Respiratory Treatments Anti-Gas Treatments Digestive Aids Sleep Aids Antiseptic Cream / Wash Laxatives Stomach Remedies Dependent Care Expenses Employment-Related Expenses Expenses reimbursed by a Dependent Care Reimbursement Account must be expenses incurred to allow the participant and, if applicable, the spouse to be gainfully employed. This means the participant must only claim expenses incurred while they are actually at work, excluding expenses which might be incurred while the participant is on a leave of absence, on vacation or is out of work ill. However, temporary absences from work for matters such as illness or vacation can be disregarded if the participant is required to pay for dependent care expenses on a weekly or longer basis. Dependent care expenses incurred during a typical leave of absence (paid or unpaid) are non-reimbursable. The following employment-related expenses are eligible for reimbursement by a Dependent Care Reimbursement Account: After-school care Before-school care Day camp Dependent care center Elder care Nanny Preschool/Nursery school Registration fee (to obtain care) Sick-child facility - 4 -
How to submit claims You can submit claims to your FSA online at www.myabg.com or by completing and submitting a Reimbursement Request Form. The first time you log into the website your user ID will be your Social Security number (with no dashes) and your password will be the last four digits of your Social Security number. You will be prompted to change your user ID and password before continuing. To submit a claim: 1. Log into your account at www.myabg.com (instructions above). 2. Select on the Claims tab at the top of the screen. 3. Select Enter New Claim from the menu on the left. 4. Enter all required fields in claim entry screen. Note that claims will not be processed until the date(s) entered in the Service Date fields have passed. 5. You will have the option to upload your itemized documentation or to print a cover sheet to fax in with your documentation. Important: claims submitted online will not be approved for payment until supporting itemized documentation is received and approved by ABG There are a few important things to keep in mind when submitting FSA claims online or using the Reimbursement Request Form. Following these basic claims submission guidelines will help prevent denials and make the claim process as quick and easy as possible. Always include documentation to support the expenses you are claiming. This documentation must show what expense you are claiming, the name of the provider, date of service and the amount you are required to pay. Do not fax supporting documentation for online claims if you already uploaded the documentation on the website when you entered your claim. If you have multiple expenses it is okay to enter one online claim for all of them together. You should enter the first and last service dates and it is okay to upload all documentation together as one attachment. Remember, online claims cannot be paid until itemized documentation is submitted to Alliance Benefit Group and approved. If you submit a claim online please DO NOT complete a Reimbursement Request Form. If you choose not to use online claims you can use the Reimbursement Request Form to request funds from your FSA. Completed forms can be mailed, faxed or emailed to: Alliance Benefit Group Toll free fax: 1-866-808-7823 Attention: FSA Department Email: claims@abg-mn.com PO Box 1226 Albert Lea, MN 56007-5 -
Other Options Online We encourage you to take a look at the My Profile tab on our website to make sure your personal information and preferences are up to date. The following preferences can be updated under My Profile : Direct deposit this an available payment option for your FSA. If you are not already receiving payments by direct deposit you can enter your bank information here. Email address if we have your email address we will email your direct deposit notices. Email notifications you have the option to receive an email notification when new claims are entered for your FSA. You can also view Transaction History and Payment History on the My Account Summary screen. These options will allow you to easily view the activity on your account. You will have the option to filter this information for more refined searching. Contacting Alliance Benefit Group You can access your Health and/or Dependent Care FSA online at any time by visiting www.myabg.com. If you have never logged in before, your user ID will be your Social Security number (with no dashes) and your password will be the last four digits of your Social Security number. You can contact Alliance Benefit Group customer service at 1-877-661-4727. Live operators are available Monday through Friday from 7:00 a.m. to 6:00 p.m. Central time. Or you can email Alliance Benefit Group s FSA department at claims@abg-mn.com. - 6 -