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Health FSA FAQs

What is a Health Flexible Spending Account?

A Health Flexible Spending Account (FSA) is part of your benefits package. This plan lets you use pre-tax dollars to pay for eligible health care expenses for you, your spouse, and your eligible dependents.

Here's how a Health FSA works. Money is set aside from your paycheck before taxes are taken out. You can then use your pre-tax FSA dollars to pay for eligible health care expenses throughout the plan year. You save money on expenses you're already paying for like doctors' office visits, prescription drugs, and much more.

Why is it a good idea to have a Health FSA?

Health FSAs benefit everyone - single individuals, families, and soon-to-be retirees. Setting aside pre-tax dollars means you pay fewer taxes and increase your take-home pay by your tax savings. Save an average of 30 percent on eligible expenses that you're currently paying for out of your pocket, such as dental checkups, prescription eyeglasses, and bandages.

In addition, the UC Health FSA plan includes a carryover feature that allows you to carry over up to $500 of unused funds to the following plan year*. There's no reason not to take advantage of tax savings year after year.

What expenses are covered under a Health FSA?

Only eligible expenses can be reimbursed under the FSA. These expenses are defined by Internal Revenue Code § 213(d) and the University of California plan. You can learn about your plan by reading the Summary Plan Description (SPD).

Eligible Health FSA expenses are those that you pay for out of your pocket for medical care that's provided to you, your spouse, and eligible dependents. Generally, IRS rules state that medical care includes items and services that are meant to diagnose, cure, mitigate, treat, or prevent illness or disease. Transportation that is primarily for medical care is also included.

Here are some examples of eligible expenses:

  • Your health plan deductible (the amount you pay before your plan starts paying a share of your costs)
  • Your share of the cost for doctor's office visits and prescription drugs
  • Your share of the cost for eligible dental care, including exams, X-rays, and cleanings
  • Your share of the cost for eligible vision care, including exams, eyeglasses, contact lenses, and laser eye surgery

The list of eligible expenses is based on IRS rules. Here are some other IRS rules you should know about:

  • No double dipping: Expenses reimbursed under your Health FSA cannot be reimbursed under any other plan or program. Only your out-of-pocket health care expenses are eligible for reimbursement. Plus, expenses reimbursed under a Health FSA may not be deducted when you file your tax return.
  • Timing is everything: FSAs have a start date and an end date, and the time in between is called the plan year. Expenses must be incurred during the FSA plan year. As noted in IRS guidelines, "expenses are incurred when the employee (or the employee's spouse or dependents) is provided with the medical care that gives rise to the medical expenses, and not when the employee is formally billed, charged for, or pays for the medical care." This means the date of service must be within the current plan year and not when you pay for the service.

Are over-the-counter medicines eligible expenses?

Yes, but they require a prescription to be an eligible Health FSA expense. IRS rules state that over-the-counter (OTC) medicines and drugs are no longer eligible for reimbursement under your Health FSA unless prescribed by a doctor (or another person who can issue a prescription) in the state where you purchase the OTC medicines. This rule does not apply to insulin (including OTC insulin). Any claim you submit for reimbursement that has an OTC medicine expense must include a Request for Reimbursement Form and one of the following types of supporting documentation:

  • A written or electronic OTC prescription along with an itemized cash register receipt that includes the merchant name, name of the OTC medicine or drug, purchase date, and amount
  • A printed pharmacy statement or receipt from a pharmacy that includes the patient's name, the Rx number, the date the prescription was filled, and the amount

Here are some of the many examples of OTC medicines and drugs now requiring a prescription:

  • Allergy and sinus: Actifed, Benadryl, Claritin, Sudafed
  • Antacids: Mylanta, Pepcid AC, Prilosec, TUMS
  • Aspirin and pain relievers: Advil, Excedrin, Motrin, Tylenol
  • Cold and flu: Nyquil, Theraflu, Tylenol Cold & Flu
  • Diaper rash ointments: Balmex, Desitin
  • First aid creams, sprays, and ointments: Bactine, Neosporin
  • Sleep aids: Sominex, Tylenol PM, Unisom Sleep Tabs

Please note: Prescription medicines and insulin (including over-the-counter insulin) aren't affected by this change. You can follow the same process when buying these items and submitting FSA claims.

What over-the-counter items are eligible expenses?

There are many items eligible for reimbursement through your Health FSA, and you can use your benefit card to purchase these items. Here are some of the many examples of eligible over-the-counter items:

  • Bandages, Band-Aids, and gauze
  • Batteries for hearing aids, blood glucose monitors, etc.
  • Diabetic supplies and test kits
  • First aid kits
  • High blood pressure monitors
  • Thermometers

Can I use my FSA funds to stock up on over-the-counter items?

No. You can only use your FSA for items that you can reasonably use during the plan year. If you "stockpile" OTC items, you won't be reimbursed.

What expenses are not covered under a Health FSA?

Expenses that are not approved are called "ineligible expenses." Ineligible Health FSA expenses include:

  • Cosmetic surgery and procedures, including teeth whitening
  • Herbs, vitamins, and supplements used for general health
  • OTC medicines that you don't have a prescription for (except insulin)
  • Insurance premiums
  • Personal use items such as toothpaste, shaving cream, and makeup
  • Prescription drugs imported from another country

Also, as described in a previous question, you can't use your FSA for:

  • Services that take place before or after your coverage period
  • Expenses that are reimbursed by another plan or program, including a health care plan

These are only a few of the examples of expenses that aren't covered by a Health FSA. View more examples of eligible and ineligible expenses on our Health FSA Eligible Expenses page.

How do I use my FSA for orthodontic services?

These services aren't provided the same way as other types of health care. Most of the time, services are provided over a long period of time and may extend beyond the plan year. Orthodontic services tend to be hard to match up with actual costs. As a result, the reimbursement process is different, and you have two ways to be reimbursed:

Entire cost of treatment: This method allows you to be reimbursed for the full amount of the orthodontia contract. You can do this only if you paid the full amount of services during the plan year. To get reimbursed, send in these items:

  • Completed reimbursement request form
  • Proof of payment for the entire contract, including start date and expected end date
  • Proof of payment made during the applicable plan year in which you are requesting reimbursement

Monthly approach: This method allows you to be reimbursed for the first round of treatment (usually called banding fees) and then monthly reimbursement after that. To get reimbursed for banding fees, submit:

  • A completed reimbursement request form
  • Your treatment plan or itemized statement that includes the start date and the expected end date
  • Proof of the initial down payment

After the first reimbursement request is submitted, send in these items for monthly reimbursement:

  • Your completed reimbursement request form
  • An itemized statement or monthly coupons from the orthodontist
  • Proof of the monthly payment

How does the Health FSA carryover work?

With a carryover, you do not have to rush to spend all of your health FSA funds or worry about losing money when the plan year ends. As long as you are an active employee and eligible to participate in the UC Health FSA plan, you may carry over the maximum amount allowed by the plan - that's $500. If you plan to re-enroll for the following year, there is no minimum carryover balance required and you can spend your carryover dollars until the account funds are gone. However, if you do not re-enroll in the Health FSA, you must have at least $25 from the prior plan year in your account at the end of the run-out period (April 15 of the next plan year) to be able to carry over funds to the next plan year. Funds under $25 are forfeited. You may only carry over funds for one plan year.

IMPORTANT: IRS rules do not allow a Health FSA plan to have both a carryover feature and grace period. The grace period only applies to the DepCare FSA, which does not include the carryover feature (per IRS rules).

How much money can I put in my Health FSA?

The amount you can put in your Health FSA is called an "annual election." The maximum annual election for the University of California Health FSA plan is $2,550 for the 2017 plan year. To participate, you must contribute at least $180 to your Health FSA on an annual basis. If you carry over funds from the previous plan year, the carryover amount does not count against your Health FSA election for the following plan year, and you may still elect the maximum amount allowed.

How much money is available during the plan year?

Your entire Health FSA election is available on the first day of the plan year. If your Health FSA is active, your full annual election amount decreases as you submit your reimbursement requests. You can find out your available funds by logging in to your online account.

How do I keep track of my account activity?

Your FSA information is available anytime day or night by logging it to your online account. Log in and find:

  • Real-time account balance
  • Claims status
  • Reimbursement payment history
Where can I get a reimbursement request form?

This form is available online at mybenefits.conexis.com. Just log in to your account to find it.

What do I need to submit along with a reimbursement form?

You must save all itemized receipts and other supporting documentation for every FSA expense. Try to keep all of your documentation filed in an envelope or box. Appropriate documentation includes:

  • For office visits and other services: Your health plan's Explanation of Benefits (EOB) statement or an itemized receipt or bill from the provider that includes the patient's name, a description of the service, the original date of service, and your portion of the charge.
  • For prescription drugs: A pharmacy statement or printout including the patient's name, the Rx number, the name of the drug, the date the prescription was filled, and the amount.
  • For over-the-counter medicines: A written or electronic OTC prescription along with an itemized cash register receipt that includes the merchant name, name of the OTC medicine or drug, purchase date, and amount; OR a printed pharmacy statement or receipt that includes the patient's name, the Rx number, the date the prescription was filled, and the amount.
  • For over-the-counter health care-related products: An itemized cash register receipt with the merchant name, name of the item/product, date, and amount.

In some cases, a Medical Determination Form completed by a doctor is required. Credit card receipts, canceled checks, and balance forward statements do not meet the requirements for acceptable documentation.

Is there a deadline for submitting reimbursement requests?

Yes, the Health FSA includes a run-out period, which is a set number of days after the plan year ends that allows you to submit claims for eligible expenses incurred during the plan year.

Example: Your plan year runs from January 1 to December 31 and you have a run-out period through April 15. You have a doctor's office visit on December 22 but do not receive a health plan EOB until January 4. Since the service was incurred in December, you can use your Health FSA funds that remain from the plan year toward the expense. Simply submit the EOB along with a completed reimbursement form by April 15 - the end of your plan's run-out period.

After the April 15 filing deadline, up to $500 of your unused Health FSA funds are deposited in a carryover plan. IRS rules state that you forfeit any unused FSA funds that are more than $500.

Can I change my election amount?

Your election can't be changed during the plan year unless you have a change in status or other qualified event - that's an event defined by IRS rules - and the UC plan must allow the change as well. Qualified changes in status events include:

  • A change in legal marital status (marriage, divorce, or death of your spouse)
  • A change in the number of your dependents (birth or adoption of a child, or death of a dependent)
  • A change in employment status of you, your spouse, or dependent
  • An event causing your dependent to satisfy or cease to satisfy an eligibility requirement for benefits

There are two parts to determining if a change in election will be allowed. First, you must experience a change in status or other qualified event. Second, your requested change must be consistent with the event. For example, if you have a baby, you could increase your FSA contribution. Please see your Summary Plan Description for more information about other qualified changes, consistency requirements, and exceptions that may apply.

Please note: The information above assumes that your FSA plan allows all changes permitted under the IRS rules. An employer may restrict mid-year election changes by the way the plan is set up. Please see your Summary Plan Description for specific rules that apply to the UC plan. If you have a change in status or other qualified event, contact your human resources or benefits representative to obtain the forms you will need to complete.

What is the "use-it-or-lose-it" rule?

Even though the Health FSA has a carryover and there is less risk of losing money, keep in mind that your Health FSA contributions are still subject to the IRS "use-it-or-lose-it" rule. When the run-out period expires, you will forfeit any unused funds that remain in your Health FSA after the $500 carryover is deducted. The unused funds may not be paid to you in cash or other benefits, including transferring money between FSAs.

What happens if I stop working for working for UC?

If you stop working for UC or you lose your FSA eligibility, your plan participation and your pre-tax contributions will end. Expenses for services you have after your termination date are not eligible for reimbursement.

Please note: You may be entitled to elect COBRA continuation coverage under the Health FSA and receive reimbursement for qualified expenses incurred after your termination, but only if you continue to make the required FSA COBRA premium payment using your money after taxes have been taken out. However, you generally do not have the right to elect COBRA continuation coverage if the cost of COBRA continuation coverage for the remainder of the plan year equals or is more than the amount left in your FSA (excluding your carryover dollars, if applicable). Please see your Summary Plan Description for specific rules that apply to your FSA plan.

* If you choose to re-enroll the Health FSA for the following plan year, there is no minimum balance requirement and you will be enrolled in the carryover if any funds are available. However, if you do not re-enroll in the Health FSA, you must have at least $25 from the prior plan year in your account at the end of the run-out period to be enrolled in the carryover plan and will only be allowed to carry over funds for one year.