Learn About Your FSA/HRA

Learn About Your FSA/HRA

What is a Flexible Spending Account

A Flexible Spending Account (FSA) allows individuals to use pre-tax dollars for health care or child/dependent care expenses not covered by insurance plans. Participants contribute a portion of their paychecks to a FSA and save 25% to 40% in taxes. Money in a FSA account can be used to pay for out-of-pocket medical expenses or dependent care expenses. 

 

Before enrolling in an FSA, decide how much to contribute to each account for the entire Plan Year. An equal part of the annual election is deducted from each paycheck pre-tax (before Federal, State, and FICA taxes are deducted). After incurring qualified expenses, submit claims to Rocky Mountain Reserve for reimbursement via check or direct deposit.

What Are The Rules?

  • Contributions are subject to the “use-it-or-lose-it” rule. Unclaimed monies are forfeited at the end of the plan year. Employer’s may adopt a provision allowing up to a $500 roll over of un-used monies that would then not be forfeited.

  • Elections are irrevocable during the plan year, unless the participant has a change of status. IRS Regulations define a change of status.

  • Expenses must be incurred by participants or eligible dependents during the current plan year and while participating. Medical expenses are incurred when care is received and not when paid.

  • Only eligible expenses can be reimbursed. Eligible expenses are defined by Internal Revenue Code §213(d) and the employer’s plan. Expenses generally include items for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body.

 

 

  • Only “out-of-pocket” expenses are eligible for reimbursement. Expenses covered by insurance or any other plan or program are not eligible for reimbursement.

  • Expenses for general well being such as cosmetic surgery are not eligible for reimbursement.

  • Expenses reimbursed under the health FSA may not be used to claim any federal income tax deduction or credit.

  • The annual health FSA election amount is avail-
    able at any time during the plan year.

 

 

Eligible Expenses

General Rule: The term “medical care” means amounts paid for the diagnosis, cure, mitigation, treat-ment, or prevention of disease, or for the purpose of affecting any structure or function of the body.

  • Acupuncture 

  • Ambulance

  • Bandages

  • Birth control pills

  • Breast pumps

  • Chiropractor

  • Coinsurance, deductibles

  • Contact lenses

  • Crutches, splints, casts

  • Dental treatment

  • Diagnostic devices

  • Eyeglasses, eye exams, sunglasses (prescription)

  • Eye surgery

  • Fertility enhancement

  • HMO expenses

  • Hearing aids, batteries, and exams

  • Hospital services

  • Immunizations, vaccines, flu shots

  • Laboratory fees

  • LASIK eye surgery

  • Medicines (prescribed)

  • Obstetric services

  • Optometrist

  • Orthodontia

  • Prescription drugs

  • Psychiatric care

  • Psychologist

  • Speech therapy

  • Stop smoking programs

  • Surgery/operations

  • Therapy

  • Vasectomy

  • Wheelchair

  • X-rays

 

 

Common Eligible Medical Expenses:
Over-The-Counter Items:
Health Care Reform & Over-The-Counter Drugs
  • Band-aids/bandages

  • Cold/hot packs for injuries

  • Condoms

  • Contact lens solutions

  • Diabetic supplies

  • First aid kits

  • Medical alert bracelets/necklaces

  • Pregnancy test kits

  • Thermometers

  • Allergy medications

  • Antacids

  • Anti-diarrhea medicine

  • Bug-bite medication

  • Cold medicine

  • Cough drops and throat lozenges

  • Diaper rash ointments

  • Hemorrhoid medication

  • Incontinence supplies

  • Laxatives

  • Muscle/joint pain products/rubs

  • Nicotine medications, gum, patches

  • Pain relievers

  • Sinus medications, nasal sprays, nasal strips

  • Sleep aids

  • Wart removal medication

Dual Purpose Expenses That Potentially Qualify:
  • Massage therapy

  • Vitamins

  • Supplements

  • Herbal supplements

  • Natural medicines

  • Aromatherapy

  • Weight-loss program

  • Health club dues

The expense must be for a specific medical reason and be accompanied by a Prescription.

Ineligible Expenses:
  • Cosmetic surgery

  • Long term care

  • Feminine care

  • Hair transplant/re-growth

  • Maternity clothes

  • Nutritional supplements

  • Personal use items: such as toiletries, cotton swabs, tooth brush, facial care, shampoo

  • Teeth whitening

  • Drunk driving classes

  • Kindergarten tuition expenses

Note: These are only examples and this list is not all-inclusive - it only provides some of themore common expenses. We recommend that you check with our office to clarify any expense or questions.

Note: Over-the-Counter Medicine and Drugs require a Prescription to be   eligiible for reimbursement under the plan.

Dependent Care Eligible Expenses:

  • A dependent receiving care must be a child under the age of 13, or a tax dependent unable to provide for their own care, who resides with you. The care must be necessary for you or your spouse to be gainfully employed or to go to school. Care may be provided by anyone other than your spouse or your children under the age of 19. Expenses for schooling, kindergarten, overnight care, and nursing homes are not reimbursable.

  • The maximum you can elect, in a calendar year, is equal to the smallest of the following:

    -$5,000 – Married and filing federal taxes jointly or a single parent

    -$2,500 – Married and filing separate federal tax return

  • The amount contributed year-to-date, is available for reimbursement.

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