ShopThat's Eligible?! Real answers to common FSA eligibility questions
With new deadline extensions in place, thousands of eligible products available for purchase, and the freedom to use an FSA card, flexible spending accounts are easier than ever to use. We've seen a little bit of everything since we founded our company in 2010, but year after year there are still common questions on the minds of FSA holders.
So, once and for all, we're tackling the three most common eligibility questions we receive from FSA users. Whether you're an HR professional or an account holder, you can be armed with the knowledge necessary to take full advantage of your tax-free funds.
"Why do I need to get a prescription for items like Advil or Tylenol that I can buy without one in a pharmacy?"
New visitors to our site may think that we're putting FSA users through the ringer to purchase over-the-counter (OTC) medicines, but in reality, we are simply complying with rules put into place through the Patient Protection and Affordable Care Act (PPACA).
The provision requires FSA users to submit prescriptions for any OTC products that have a medicated ingredient like Advil or Claritin to obtain reimbursement. Our team continues to support the repeal of this provision, but until that happens, we can help you navigate this requirement.
First, FSA users should be mindful of any upcoming OTC medicine purchases they may need to make in the coming months, and pick up prescriptions during routine doctor office visits. If you don't have an appointment on the horizon, we created the Prescription Process to help.
Simply provide your physician's name, phone number and address and we will obtain the documentation necessary for you to make your purchase.
Update: As of March 2020 with the passage of the CARES Act, the OTC Rx requirement has been repealed and prescriptions are no longer necessary to purchase over-the-counter medicines with an FSA or HSA. Additionally, menstrual care products like tampons and pads are fully FSA-/HSA-eligible. Learn more here.
"So, diapers aren't FSA-eligible, but toddler training pants are?"
This is a common point of confusion for FSA users as it would seem that these two products perform the same function. As is often the case, diapers are considered "general health" items by the IRS. In short, diapers are used after a healthy function of the body, therefore it has no medical purpose.
However, toddler and young child training pants are eligible because they protect against bed-wetting, an involuntary function of the body. Training pants are commonly used in treatment plans for bed-wetting to help kids develop nighttime bladder control.
"Do I have to wait to spend my FSA funds until they accrue?"
FSAs are funded through regular payroll deductions from an account holder's paycheck over the course of the year - tax-free! This has the benefit of reducing your taxable income and helping you pay less in taxes. But for many who are on the fence about an FSA, how these payroll deductions take place can be a point of confusion.
But the solution is actually quite simple: an account holder's FSA contribution (which they elect during their open enrollment period) is available in full at the beginning of their plan year. So if you elected the maximum for 2020 ($2,750), that full amount would be available to spend on qualifying items and services from the start of the plan year.
Claritin Non-Drowsy Allergy Relief
Non-drowsy indoor and outdoor allergy relief.
Motrin Ibuprofen Pain Reliever
Relieve headache pain and bring down fevers quickly with Motrin IB tablets
GoodNites Underwear
A better way to manage bedwetting, with complete nighttime protection.
Tranquility Adult Disposable Underwear
Ensure confidence and comfort during active daytime hours.
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Don't waste time hunting for ways to spend your tax-free funds. In That's Eligible?!, we'll bring you these updates every Monday, so you don't have to. And for all things flex spending, be sure to check out the rest of our Learning Center, and follow us on Facebook, Instagram and Twitter.
Your top FSA grace period deadline Q&As
With the FSA grace period ending on March 15, we've seen a boost in social media activity as FSA users look to spend their remaining funds before the deadline.
We're here to answer the most-popular FSA grace period questions to help you better manage your FSA funds. These are just a few of the most-commonly asked questions, but the answers can help equip you with the knowledge to make this a successful March deadline.
"If I purchase an Rx item, where do I send the prescription?"
Over-the-counter products that contain medicated ingredients - such as Tylenol, Advil, Claritin and even some cough drops - require a doctor's prescription for FSA reimbursement. In most stores, you need to hand your prescription to the pharmacist and you will be able to use your FSA card with the prescription number you get.
However, if you shop on FSAstore.com, we have a easy Prescription Process that requests prescriptions from your doctor on your behalf, so you can quickly make your purchase without any hassle.
Update: As of March 2020 with the passage of the CARES Act, the OTC Rx requirement has been repealed and prescriptions are no longer necessary to purchase over-the-counter medicines with an FSA or HSA. Additionally, menstrual care products like tampons and pads are fully FSA-/HSA-eligible. Learn more here.
"If I retire this year, what happens to the leftover balance in my account?"
If you're planning to retire and you're enrolled in an FSA, you should spend the money before leaving your position. If you don't, your unspent money will go back to your employer.
If you've been keeping track of your FSA balance and spending throughout the year, hopefully there won't be much leftover. If you need some inspiration for new ways to use your remaining balance, check out our hi-tech health and surprisingly eligible goodies collections.
"What specific health practitioners can sign a Letter of Medical Necessity?"
Medical products and services that fall outside of FSA eligibility rules like massage therapy and calcium supplements can still be eligible with a Letter of Medical Necessity (LMN) from a doctor. However, your plan administrator can still approve or deny the expense.
"What's the difference between the FSA grace period and run-out period?"
Let's tackle this as simply as possible: the FSA grace period is your last chance to spend, the "run-out" period is your last chance to file claims.
The FSA grace period gives you 2.5 months after the end of your plan year to spend your remaining FSA funds from the previous year. So if your plan usually ends on December 31, you would have until March 15 to spend the last of your 2019 funds.
The run-out period is an option offered by your employer to submit claims from the previous year. This will give you a chance to be reimbursed for any outstanding medical expenses you incurred during 2019 and forgot to submit for reimbursement. Check with your benefits administrator to see if this option is offered to you (since not all plans have it) and to find out how much time you have to submit expenses.
"So, can I use 2019 FSA funds to pay for 2020 expenses?"
Employers have the option to elect either a 2.5 month grace period or a $500 rollover option to help you not lose your funds. If you have the FSA grace period, your plan year will function a bit differently than those without one.
For example, if you have a plan year beginning in January 2019 that ends in December runs into 2020, the FSA grace period extends this deadline until March 15, 2020. Check with your plan administrator to see if you have the grace period option.
Those with a traditional 12/31 deadline have to spend down their funds by this date. Those with FSA rollover can move up to $500 of their remaining funds into their 2020 FSA totals.
If you have more questions about how to #GetFlexSmart, reach out to us on Facebook, Instagram and Twitter. We'll be reporting back on more common questions soon!
How can I contact my third party administrator?
Each year during open enrollment you sign up for health benefits. A Flexible Spending Account (FSA) could be included in the employee benefit package if your company offers the plan.
Sometimes your employer handles the administration of FSA benefits, but often a Third Party Administrator is asked to step in. A Third Party Administrator (TPA) is an independent organization that handles employee benefits administration. Third party administrators are typically hired to handle benefit processing as this can be complex and time consuming for employers. They're essentially outsourced mediators (between employees and employer) in charge of claims processing, benefit enrollment, and benefit management on behalf of your employer.
FSA administration deals with protected health information, which is safeguarded in compliance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA). TPAs must comply with these HIPAA safeguards and stay updated on important health regulations that could affect these benefit plans.
Who is my TPA?
A Third Party Administrator (TPA) is the "go-to source" for everything related to your Flexible Spending Account. TPAs can also be referred to as FSA administrators, benefits administrators, or FSA providers.
Your TPA has access to your FSA account including your FSA balance, plan information and guidelines, and plan deadlines. Your TPA can also answer questions about FSA eligible products or FSA eligible services which qualify for your individual plan. Your TPA is also responsible for claims reimbursement.
How do I contact my TPA?
You should reach out to your Human Resources department if you're unsure who your TPA is. If you have an FSA debit card, you can contact your TPA by checking if there is a toll-free number listed on the back of the card.
November Mailbag: Your FSA Questions
Happy November, FSAstore.com customers! Each month, we receive FSA questions from Flexible Spending Account (FSA) holders who are looking to understand the finer points of their healthcare benefits, and the sometimes confusing regulations that surround these accounts.
Here are a few of the best FSA questions we've received this month that could prove useful:
Can I sign up for a Health Savings Account (HSA) if my spouse has a general purpose FSA?-Ethan, Austin, Texas.
You will not be eligible for an HSA if your are also covered by any other benefit that provides first-dollar coverage for medical products and services. However, there are a few exceptions that could give you the opportunity to sign up for an HSA if you so desire.
First, a limited purpose FSA does not provide first-dollar coverage, therefore it will not prevent you from opening an HSA. Additionally, FSAs in which you are not covered will not prohibit you from opening an HSA. In other words, if your spouse is enrolled in an FSA but doesn’t cover you as a dependent, you would still qualify for an HSA.
Also note that your ability to apply for HSA eligibility is also tied to the structure of your spouse's FSA. For instance, if you are covered under your spouses’ FSA and the FSA allows the carryover of funds into the following year, your HSA ineligibility would continue throughout the following year. Ultimately, you should weigh the choice of an HSA or FSA based on the benefits that are provided by both employers, your long-term spending and savings plans and comparable contribution limits between the two accounts to make the best choice. Your HR department may be able to help you with additional questions.
I submitted a Letter of Medical Necessity to cover my acupressure treatments, but I am approaching a new plan year. Do I need to submit an additional LMN to continue my treatments? -Kathryn, Salt Lake City, Utah.
A Letter of Medical Necessity from a physician is required for certain medical products and treatments to be eligible for reimbursement under a flexible spending account (FSA), health savings account (HSA) or health reimbursement arrangement (HRA). These documents are submitted to your benefits administrator at the beginning of your treatment plan, and your physician's letter must outline how your acupressure treatments will be used to alleviate a specific medical condition and how long the treatment plan will last.
However, if your treatment schedule will go on longer than expected, an additional Letter of Medical Necessity may need to be submitted to your benefits administrator to cover the acupressure expenses in the coming year.
Thanks so much to our customers for another month of great questions! Feel free to visit our social media pages to submit your inquiries, and visit FSAstore.comand HSAstore.com to maximize the use of your healthcare benefits!
