How does fsa reimbursement work

A flexible spending account or arrangement is an account you use to save on taxes and pay for qualified expenses. Other key things to know about FSAs are:.

What makes them flexible? They give employers the most options when deciding on what spending accounts to offer. They then have 52 weeks to repay the loan using pretax dollars. Both plans allow you to contribute pre-tax dollars, have annual contribution limits, and can only be used for approved health-related expenses. But there are a few key differences. However, you can only have an HSA in combination with a high-deductible health plan , which might or might not be the insurance choice you prefer.

Because accounts like these are more complicated than basic checking or savings accounts, some consumers may be leery of contributing to an FSA. Internal Revenue Service. Accessed Nov. Health Insurance. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance.

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Develop and improve products. You must retain your receipts provider documentation, not just credit card receipts for all of your debit Card purchases. The benefit of the debit Card is that it eliminates most out- of-pocket cash outlays and you do not have to wait to receive reimbursement checks.

Please be sure to use your debit card to pay for eligible expenses incurred within the plan year, only. That means you should not use the card to pay past balances due. The IRS requires that every transaction made with any type of Flexible Spending Account prepaid debit card must be substantiated in order to confirm that the cardholder is using the Card to pay for an eligible expense.

The IRS considers many expenses paid with the Card to be automatically substantiated at the point of sale. In this instance you do not have to separately submit a receipt for the copayment amount for substantiation. Many expenses cannot be substantiated at the point of sale, and IRS regulations require you to submit extra documentation to verify the transaction.

Examples of expenses that may not automatically substantiate include dental, chiropractor and physician office visits where the amount paid is not equal to an established copay amount that is recognized in the Card System, and situations in which you charge more than on copay expense in the same Card swipe. If you use your Card for an expense that cannot be automatically substantiated at the point of sale, the merchant will be paid for the expense, but you MUST provide documentation to verify that the purchase is an appropriate FSA expense.

You will be required to submit substantiation to BAS in order for BAS, on behalf of your plan, to confirm that the expense is eligible in accordance with IRS guidelines. The Internal Revenue Service places rules on FSAs in exchange for allowing participants to receive the tax-favored benefits of participating in the plan. One of those restrictions is that all claims must be substantiated with supporting documentation that meets certain requirements.

Appropriate substantiation includes the merchant or provider name, the service or item purchase date, and the amount of the purchase. Explanation of Benefits EOBs and other provider documentation with the required information may be used as verification of an expense. Cancelled checks, handwritten descriptions of charges, card transaction receipts or previous balance receipts cannot be used to verify an expense.

A credit card receipt from your Card swipe is not sufficient. Medical Item — Examples of medical items include nonprescription reading glasses, bandages for a current wound, contact lens solution, etc. You should save all of your receipts for as long as you would save documentation for your tax return.

Consider keeping all information in one place so it is readily available upon request. Usually the service provider can recreate an account history and provide replacement documentation. Insurers can generally issue a replacement EOB.

In the event that documentation cannot be located, recreated, or if the expense is ineligible for reimbursement, you can send a check or money order to BAS for the ineligible amount so BAS can forward the repayment to your employer for it to be credited back to your FSA. If this applies to you, please contact BAS for more information. If there is a need to submit a receipt or other documentation, you will receive an email from wexhealth. The email will include an attachment with more information.

You must respond to the emails in order to complete the process for documenting unsubstantiated expenses paid with your Card, as per the Card use agreement you received when you activated the Card.

If you do not have an email associated with your account, you will receive the notifications through regular U. The majority of notifications will be sent each month for services rendered the prior month. However, ALL receipts should be saved per IRS regulations, as there may be instances in which you may have to submit documentation outside of the monthly notification. If it cannot be substantiated, you will be required to repay to your FSA the amount charged.

BAS will let you know that your Card has been suspended if the documentation is not received when required. Submitting the appropriate documentation or repaying the amount in question will allow the Card to be reactivated.

If you use your Card for an expense that cannot be automatically substantiated, you will be asked for more information as follows:. Wex Health will send you a First Request for Receipts notice asking for supporting documentation for the unsubstantiated expense.

If you have a valid email address entered into MyEnroll, you will receive the letter by email from wexhealth. If you do not have an email address associated with your account, the letter will be mailed to your home address. You will have 30 days to respond to the first request for receipts. If your response is not received within 30 days, you will be sent a Second Request for Receipts notice to remind you of the need for supporting documentation.

You will have 30 days to respond to the second request. If your response is not received in this time period, your Card will be suspended and you will again be asked for supporting documentation. Please note that you may continue to submit manual paper or online claims while the card is suspended. Your card will remain suspended until you provide adequate documentation, or until you repay your account with after-tax dollars.

If you provide additional documentation, that documentation will be reviewed to determine if the expense can be properly paid from your FSA. If it is determined that the expense can be properly paid, the claim will be substantiated and your Card will be reactivated.

If after review of the documentation you submit, it is determined that there is not sufficient information to substantiate the claim, you will be sent another notification requesting more information. You will have 30 days to respond to the request for more information. According to the revised regulations, employers have one of two options available for FSAs. If your employer allows you the grace period, you can use your account until March 15, unless your employer has another end date.

You can't have both options available. A sum rolled over from a previous year does not count against the next year's contribution limit. In addition, sums carried over can continue to be carried over in subsequent years. The IRS' new guidance allows employers more flexibility for benefit plans for and as part of the Consolidated Appropriations Act.

Employers can allow employees to carry over all unused funds from to , and from to —or they can extend the grace period from 2. Either way, all unused funds can be carried over and used throughout the entire year.

There are ways to get around that limit, however. This determines how much money one should annually allocate to an FSA account, based on the following qualified medical expenses :. To determine your FSA contribution for a year, estimate these expenses as a baseline while you factor in other potential family medical expenses. The grace period can be up to a maximum of 2. Any unused FSA balance would be lost after the grace period ends.

However, due to the pandemic, employers were given the flexibility to extend this grace period to twelve months or to allow employees to carry over all unused funds from to , and from to Run-out is a predetermined period during which you can file claims for the previous year.

For instance, if your run-out period lasts until March 31, you have until that time to file claims for expenses you incurred before Dec. Let's say you visited the dentist on Nov. You could still file before March 31 and be reimbursed. If you wait until after March 31, you forfeit any unused funds except in years with the extensions noted above.

Run-out periods can vary by plan, so you need to speak with your plan administrator or human resources HR department to find out important dates and information about your plan. So it's important to understand how they work. The following are some of the main differences between the two. FSAs are only offered through employers, so if you're unemployed or self-employed , you can't open one.

HSAs, on the other hand, are individual accounts, which means anyone can establish one. These accounts can be set up through a qualifying financial institution.