| Healthcare Flexible Spending Account |
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| How does this FSA work? |
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A healthcare FSA helps you pay for eligible out-of-pocket healthcare expenses using pre-income-tax dollars. Eligible expenses include most of the medical, dental and vision services, and drug costs not fully covered in PEBB plans.
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| How much can I deposit? |
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The annual contribution limit for PEBB’s healthcare FSA is $5,000. If your spouse also has a healthcare FSA through an employer, your individual contribution limit is still $5,000.
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| When can I access the funds? |
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You have access to the total amount selected for the year as soon as your account receives the first deposit and you have eligible expenses. This excludes orthodontic (braces) expenses.
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| How do I cover orthodontics? |
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For orthodontic expenses, you must submit a copy of the contract (treatment plan) to BenefitHelp Solutions. Claims will be denied if a copy of the contract is not on file. Once the contract is on file, you may submit monthly claim forms for reimbursement for the payments made. If you pay the entire cost up front, your repayment is based on your total annual contribution election.
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| What if I'm going on COBRA? |
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Under COBRA rights, you may continue your healthcare FSA if you have money in the account at the time of the COBRA event. Deposits under COBRA are post-tax.
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| Do I have other tax options? |
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You may have alternative options under current IRS rules to deal with healthcare expenses not covered in PEBB plans. See your tax professional for advice.
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| How do I plan for this FSA? |
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Because this is a “use it or lose it” account, you must carefully estimate what your coming-year’s out-of-pocket healthcare expenses will be (also see "What's the grace period?" and "Can I change midyear?").
- Ask your pharmacy and healthcare providers for a printout of your current year expenses.
- Review your receipts, insurance forms, credit-card statements and cancelled checks to help determine this year’s out-of-pocket costs.
- Consider any additional expenses you are likely to incur in the coming year.
Use these types of estimates to help you calculate out-of- pocket costs and the monthly deposit amount on the worksheet provided below.
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Healthcare FSA Estimate Worksheet
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Anticipated annual expenses for you and your dependents
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Estimated amount
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Medical care coinsurance or co-payments
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$
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Dental care coinsurance or co-payments
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$
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Prescription drug coinsurance or co-payments
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$
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Medical care not covered by insurance (does not include cosmetic surgery
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$
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Dental care not covered by insurance (such as implants)
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$
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Prescription drugs not covered by insurance
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$
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Vision care more frequent than or beyond insurance allowance
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$
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Vision care not covered by insurance (such as laser surgery)
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$
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Travel for healthcare
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$
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Over-the-counter drugs for healthcare (such as aspirin)
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$
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Annual total ($5,000 or less)
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$
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Divide by 12 and enter the monthly deposit amount
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$
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Healthcare FSA Example
A PEBB member receives a $3,000 per month salary. After taxes take-home pay is $2,100. The member pays $200 per month for healthcare services and supplies – dollars that taxes were paid on. Now, the actual monthly income shrinks from $2,100 to only $1,900.
If the member opens a healthcare FSA, the monthly $200 spent on healthcare is not taxed. The take-home pay is $1,960, which means a $60 saving in taxes.
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Tax Savings Comparison
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Without HFSA
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With HFSA
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Gross monthly salary
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$3,000
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$3,000
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Pretax FSA deposit
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$0
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-$200
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Adjusted monthly salary
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$3,000
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$2,800
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Taxes, calculated at 30%
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$900
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$840
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Net take-home pay
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$2,100
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$1,960
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After tax medical expenses
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$200
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$0
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Spendable monthly income
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$1,900
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$1,960
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| What is the new "grace period?" |
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Before the new grace period, if you didn’t incur the same level of out-of-pocket healthcare costs during the year as you had deposited in your account, you lost access to the leftovers on Jan. 1. You could still be reimbursed for expenses you had through Dec. 31 as long as you submitted claims by the March 31 deadline. But you couldn’t use leftover funds to pay claims incurred after December 31.
With the new grace period, you can now incur expenses in the first two-and-a-half months of the new year to use last-year’s leftovers.
FSA Schedule
Event
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Date
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Enroll for 2007 FSA (Open Enrollment)
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Oct. 1-31, 2006
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Start of 2007 Plan Year
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Jan. 1, 2007
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End of 2007 Plan Year
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Dec. 31, 2007
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Start of 2008 Plan Year
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Jan. 1, 2008
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2007 Plan-year Grace Period (can incur expenses to be paid from any remaining Plan Year 2007 funds)
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Jan. 1-March 15, 2008
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2007 Plan-year Claims Deadline (all 2007 Plan Year and Grace Period claims must be submitted for payment from 2007 Plan Year funds)
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March 31, 2008
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| Can I change choices during the year? |
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You can change the amount you have selected to deposit to your annual FSA midyear only because of and consistent with a qualified status change, not because of a change in your individual healthcare needs. For example, if you plan to have laser eye surgery in 2007 and elect to have $4,000 deposited to your account to cover it but then you change your mind about having the procedure, you cannot change the amount that will be deposited to your account for the year.
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| What are eligible expenses? |
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Listed below are examples of eligible and ineligible expenses. For detailed information on expenses, contact BenefitHelp Solutions.
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Eligible Expenses
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Ineligible Expenses
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- Healthcare co-payments, coinsurance
- Prescription drug co-payments, coinsurance
- Charges in excess of usual, customary, reasonable
- Orthodontics beyond the maximum allowed
- Dental implants
- Routine eye exams, eyeglasses and contact lenses beyond the maximum allowed
- Cataract surgery or any other surgical process to correct your vision such as laser surgery
- Hearing aid costs beyond the maximum allowed
- Speech and physical therapy
- Nursing services
- Wheelchairs
- Prosthetic and orthopedic devices
- Nursing home care for treatment of illness or injury
- Prescription drugs not covered by the plan
- Over-the-counter products for medical care
- Crutches
- Guide dog or other animal for blind or deaf individuals
- Travel to receive care.
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- Cosmetic surgery
- Health or fitness club fees
- Personal care items
- Prescription drugs used for cosmetic purposes
- Most weight reduction programs
- Amounts reimbursable by other sources
- Expenses for which a federal itemized deduction is taken
- Insurance premiums
- Maternity clothes
- Illegal operations or treatments
- Funeral and burial expenses
- Vitamins or supplements taken for general health purposes
- Cosmetics and toiletries
- Tooth-whitening procedures
- Custodial care if in an institution
- Household or domestic help, even if recommended by a doctor
- Marriage or family counseling fees
- Long-term care services.
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| How do I file a claim? |
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You may print a copy of the claim form at the BHS Web site, or you can register there to submit claim forms electronically.
To file for reimbursement:
- Complete a claim form
- Attach receipts or other proof of payment made for each eligible expense item or service. Documentation must include:
- Date of service
- Provider’s name
- Type of service
- Amount charged
- Prescription number (for prescription drug)
- Receipt with name of product (for over-the-counter product).
You may also use an explanation of benefits form from your insurance carrier as proof of healthcare expenses. The IRS does not accept cancelled checks as proof of expense or payment.
Send the form and other documentation to the address provided on the form.
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| How do I appeal a claim denial? |
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If your claim is denied, you must appeal the claim denial to BenefitHelp Solutions. The company will send you a notification of the denied claim with the specific reasons for the denial.
The notification may advise you of what steps you might take in order to prove your claim. The notification also states the following:
- Your right to appeal by requesting an administrative review
- Your right to review (on request and at no charge) relevant documents and other information
- You (or your authorized representative) may request a review any time within 180 days of the claim denial notice.
Your written appeal should:
- State the reasons why you believe the claim should receive approval.
- Include any additional facts and/or documents that support your claim.
- Include any comments that you wish considered during your case review.
NOTE: If you do not appeal on time, you will lose your right to appeal.
An individual who was previously not involved in your claim will review and determine the result of your appeal. The appeal decision will be made within 60 days. You will receive a notice of claim denial when the claim remains denied, which will provide:
- Specific reason(s) for the decision
- Specific plan provision(s) on which the decision is based
- A statement of your right to review (on request and at no charge) relevant documents and other information
- A description of any specific rule, guideline, protocol, or other similar criterion or a statement that such a rule, guideline, protocol, or other similar criterion was relied on, and a copy to you free of charge upon your request.
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