Frequently Asked Questions: Flexible Spending Health Care Account

PayFlex, the new FSA claims administrator, has prepared a number of frequently asked questions accessible online at www.mypayflex.com.

Introduction

What is the Health Care Account?

The Health Care Account assists in funding eligible out-of-pocket health care expenses. Participants make pre-tax Contributions by payroll deduction and the Contributions are allocated to an account maintained on the participant's behalf by the University.

After paying an eligible out-of-pocket expense, a tax-free reimbursement check may be received from the account. The result of paying for dependent care expenses through the FSA Plan may be lower income taxes and, often, an increase in take-home pay.


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How does the Health Care Account work?

After you enroll, the Health Care Account works like this:

The amount you have specified is taken from your paycheck each month and deposited in your Health Care Account. You pay your health plan expenses as usual.

For 2007 services, you submit a claim form and receipts to the Benefits Division requesting reimbursement for these expenses. Benefits sends you a reimbursement check or by direct deposit.

For 2008 services, you may pay for physician office visit copayments or prescription drug copayments using a PayFlex debit card. You may also pay for these services by cash or check and then submit a claim form to PayFlex for reimbursement. You may pay for other services and then submit a claim form and documentation such as an Explanation of Benefits (EOB) to PayFlex.


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Eligibility

Who is eligible to participate in the FSA Health Care Account?

See the FSA Summary Plan Description. ( PDF) . Generally, employees who are scheduled to work a minimum of 17.5 hours per week or appointed on at least a half time basis. Individuals must be paid from the University's payroll system and receive sufficient earnings to cover FSA deductions.


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What if I separate from the University?

If you separate from the University, you may submit claims only for eligible expenses incurred through the date of termination (last day worked) or if you elect to temporarily continue Health Care Account participation under COBRA, through the COBRA continuation period. Expenses incurred after this date are not eligible for reimbursement. Contributions made during the COBRA continuation period are made on an after-tax basis and must be the same monthly amount made during active employment.


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Can I participate in the Health FSA if I enroll in the Value PPO Plan?

No. Value PPO members may not participate in the traditional Health FSA. They may, however, use the Health Savings Account (HSA) to pay for out-of-pocket health care expenses and the Limited-use Health FSA for dental and vision expenses..


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Contributions

Can I view My FSA Account Information On-Line?

Yes, your 2007 FSA account information including annual pledge amount, year to date contributions and claims may be viewed on-line using HRIS Self Service.

2008 account information may be viewed on the PayFlex web site.


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Contributions

How much can I contribute to my Health Care Account?

The maximum monthly contribution is $666.66 or $8,000 annually for 2007.

For individuals who become eligible mid-year, the maximum monthly contribution is the maximum annual amount divided by the number of remaining months in the year.


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Can I change the contribution amount at a later date?

Yes, IRS regulations state that an individual may change (increase or decrease) or stop his or her FSA contributions only within 31 days from the date of a qualified change in family or employment status such as marriage, birth of a child, divorce. The contribution amount may not be changed during the COBRA continuation period unless there is a qualifying change in family or employment status.


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Enrollment and Effective Dates

When may I enroll in the Health Care Account?

Employees must enroll in the Health Care Account within 31 days from the date of employment or assuming a benefits eligible position, or

During Open Enrollment, employees must complete the online enrollment process in order to participate in the Plan, or within 31 days from the date of a qualifying change in employment or family status.


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What is an eligible change in status?

IRS regulations state that an individual may change or stop his or her FSA Contributions only within 31 days from the date of a qualified change in family status such as:

The addition of an eligible dependent through birth, adoption, or legal guardianship
Marriage or divorce
The death of a dependent

A change in employment status such as:

Your spouse's gain or loss of employment
The beginning or end of a leave of absence without pay for you or your spouse

Changes that do not qualify include:

Change in your dependent care arrangement (for example, if you change to a provider who charges less)
A change in the amount of expenses you incur for part of the year (for example, during summer months)


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Must I enroll every year to continue participation in the Health Care Account?

Yes, during Open Enrollment, an individual must enroll online in order to continue participation in the Health Care Account.


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Claims

How do I file claims?

After an individual has paid for an eligible expense, he or she may submit a claim for reimbursement from his or her FSA account.

For 2007 services, an individual must complete a reimbursement claim form ( PDF) available from the Benefits Division or Chicago Human Resources Office and submit the completed form along with receipts or other required documentation to the Benefits Division.

For 2008 services, an individual must submit claims directly to Payflex.

Attach the appropriate Explanation of Benefit statements (EOB), receipts, invoices or other documents indicating provider or full name of product, patient name, amount and date(s) of service. If the patient receiving service is not yourself, please specify the relationship (spouse or dependent child). Eligible expenses may have been incurred for you, your spouse, children and any other person who is a qualified dependent under the Internal Revenue Code. You can be reimbursed only for expenses associated with services incurred in calendar year 2006 and while an individual is making Contributions to the Plan. The date you pay for an item or service is not relevant. Cancelled checks will not be accepted in lieu of an itemized bill or receipt. Statements showing only a previous balance are not acceptable documentation. $20 minimum. Sign and return this form to the Department of Human Resources, Benefits Division, 720 University Place, Evanston Campus.

PPO Health Plan Members. Individuals enrolled in the Blue Cross Premier or Select PPO plans, may access claims information on line, print out the listing of claims and attach the listing to a completed FSA claim form. The listing provides the necessary information referenced above such as service date, provider, patient, etc.

If you separate from the University, you may submit claims only for eligible expenses incurred through the date of termination (last day worked) or if you elect to temporarily continue Health Care Account participation under COBRA, through the end of the COBRA continuation period. Expenses incurred after this date are not eligible for reimbursement. Contributions made during the COBRA continuation period are made on an after-tax basis and must be the same monthly amount made during active employment.

Individuals participating in the Health Care Account may be reimbursed up to the full annual amount in his or her Account regardless of the amount contributed to the Account.

The deadline for submitting reimbursement claims for the FSA Health and Dependent Care Account for calendar year services is the end of the following February.

Any monies remaining in a participant's account as of March 1st are forfeited in accordance with IRS Regulations.


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What is the deadline for submitting claims?

Claims for 2007 services which are submitted to the Benefits Division or the Chicago Human Resources Offices by the monthly payroll cut off date will be paid on the last working day of that month from the payroll system (HRIS). Othewise, claims will be paid at the end of the following month.

Claims for 2008 services should be submitted to PayFlex and may be submitted on as frequently as on a daily basis. Payment will be made within several days of receipt.

In order to avoid account balances being forfeited, claims for services received in a calendar year must be submitted no later than the end of February of the next year.


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How is reimbursement payment made?

For 2007 services, FSA reimbursement checks and direct deposit notices will be generated by the Human Resources Information System (HRIS) - payroll system. Payment will be made in the same fashion an individual's regular paycheck is made. For example, if an individual receives his or her paycheck by direct deposit, the FSA reimbursement will also be made by direct deposit and a check stub will be sent to the employee's department using the recorded check address.

For 2008 services, PayFlex will process reimbursement by check or direct deposit. Reimbursement for office visit copayments and prescription drug copayments may also be made using the PayFlex debit card. Please see the PayFlex FAQs (including the need to keep receipts) for further information about the debit card.


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Which expenses are eligible?

While health insurance premiums qualify as a tax exclusion when completing IRS Form 1040 (annual tax return), IRS regulations specifically exclude any insurance premium as an eligible expense for FSA reimbursement.

Go to listing of eligible and ineligible expenses

Over-the-Counter Medications and Other Items. Expenses associated with certain over-the-counter non-prescription drugs are eligible for reimbursement. Examples are allergy medicines, pain relievers, antacids, cold remedies and flu remedies. All forms of these medications (e.g., tablet, liquid, capsule, drops) are eligible and include generic and store or name brand. Also included are drugs which were recently made available over-the-counter and no longer require a prescription such as Claritin and Prilosec. Expenses must be for treatment of an existing disease or to prevent a disease that is likely to occur if the medication is not taken. They do not include toiletries and cosmetics, vitamins and dietary supplements or herbal remedies.

Examples of over-the-counter medications ( PDF)

Other over-the-counter items such as gauze and Band Aids also qualify for reimbursement. Many pharmacy and other retail receipts may show items with a code which means the item qualifies for FSA reimbursement.


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What happens to health care funds I don't use?

All eligible funds must be for services provided during the period contributions are made and must be claimed by the end of February of the following year.

Under Internal Revenue Service (IRS) regulations, any monies not claimed from the Dependent Care Account as of March 1st are forfeited. Any forfeited funds are used by the University to pay the cost of administering the Health Care Account.

Therefore, careful planning of projected health care expenses is essential.


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