If you're new to flexible spending accounts (FSAs) and been through some training about these accounts, you've probably heard about "double dipping." And if you've read the fine print on any claim you've submitted, you may have already stated you won't do this. But what if you're not 100% sure about what constitutes a "double dip?"
In everyday terms, double dipping is the act of being reimbursed for the same expense twice, which can happen a lot of ways with your FSA. And it's also considered unethical, especially in the eyes of your employer.
By claiming FSA reimbursement, you're unable to seek payment for things already paid for pre-tax, or things you intend to pay with another tax-free health account. This can happen without even knowing it (more on that in a bit).
If double dipping is noticed by your FSA administrator, they'll ask you to pay your FSA back. If you don't, they may withhold future claims from payment or even shut off your card. What's worse, if it goes unnoticed by your FSA administrator, you're risking the compliance of your FSA for the entire company, as proper use of the plan is a requirement to maintain tax-free status.
It's an awful thought - so let's discuss the ways double dipping can happen and how you can avoid it.
One common form of double dipping is by paying for an FSA-eligible expense with your FSA card, and then submitting the same expense for reimbursement. Most benefits administrators can catch these mistakes pretty quickly. But if a claim does go through and you get reimbursed twice for the same expense, you'll have to pay it back to your administrator if they become aware of the issue.
Claiming through separate accounts
Let's say you and your spouse each have FSAs through your respective employers. If you pay for a copayment or FSA-eligible product and submit a claim for that expense under both accounts, this is another clear example of double dipping.
Get ahead of this -- keep your claims separate for each account to avoid problems down the line.
Double dipping can be an honest mistake, but if you make a real effort to double your reimbursements for qualifying healthcare expenses there can be big consequences. To avoid this, use your FSA card whenever possible, and keep your receipts organized to avoid any issues down the line.
From FSA basics to the most specific account details, in our weekly Asked and Answeredcolumn, our team gets to the bottom of your most-pressing flex spending questions. It appears every Wednesday, exclusively on the FSAstore.com Learning Center. And for the latest info about your health and financial wellness, be sure to follow us on Facebook, Instagram and Twitter.
Each September, FSAstore.com hosts FSA Awareness Month, a yearly initiative to help new, existing and future flexible spending account (FSA) users discover the money-saving potential of these employer-sponsored benefits. The fall is also the most common time for companies to host their Open Enrollment periods, so between these two things you'll have plenty of health coverage options to choose from!
Enrolling in an FSA will require research to figure out if it is the best option for your financial bottom line, but like all things on the internet, even long-debunked ideas can persist. Luckily, we've identified the most common FSA myths that you should disregard in your search for the ideal health plan:
"I will lose any money I don't spend by the end of the year."
While it is true that all flexible spending accounts adhere to the "use-it-or-lost-it" rule that requires all unspent funds to be forfeited to your employer at the end of each plan year, a number of regulations have made this requirement much easier to work around. Employers now have the option to choose one (or neither) of either a $500 rollover or 2.5 month grace period.
The $500 rollover allows FSA users to move up to $500 into the next plan year's allocation, which won't count against the plan year contribution limit. The 2.5 month grace period gives FSA users two and a half months to spend down the remainder of their FSA funds and submit claims. In fact, we started our company to help people avoid forfeiting funds by creating a one-stop-shop for over 4,000 eligible products you can purchase with your FSA funds. So, with a little advanced planning and careful spending, there's a good chance you won't have to waste a cent of your FSA funds each year.
"The FSA claims process is a hassle"
With the introduction of FSA debit cards, account holders have the ability to pay for qualifying products and services at the point of sale. In the past, FSA users were forced to pay with a different payment method and file a paper claim with their benefits administrator to be reimbursed for their eligible purchase. While it's still important for FSA users to save receipts and invoices for tax purposes in the event documentation is required by the benefits administrator, FSA cards make it easier for account holders to get what they need without tying up their cash waiting for reimbursement. We make sure to accept FSA cards as a method of payment on our site, and most items on our site auto-substantiate, so you can skip the receipt submission process too!
"I have to pay in before getting my full FSA allocation"
Before each plan year during Open Enrollment, FSA users choose how much money they would like to set aside for the year, and this is taken out, pre-tax, from your paycheck through regular payroll deductions. While that may sound like your FSA funds will accrue over the course of the year, the reality is the full FSA allocation is available from the first day of the plan year. So, you can be confident that the money you set aside will be ready for any medical emergency or qualifying purchase right away.
For everything you need to keep your family healthy year-round, rely on FSAstore.com! We have the web's largest selection of FSA-eligible items to help you maximize the potential of your healthcare benefits.