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Summary of Benefits with Frequently Asked Questions
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Introduction: A Valuable Benefit
Eligibility and Status
Open Season and Enrollment
BENEFEDS
Financial Facts
The Health Care Flexible Spending Account (HCFSA)
Limited Expense Health Care Flexible Spending Accounts (LEX HCFSA)
The Dependent Care (Day Care) Flexible Spending Account (DCFSA)
Filing Claims for Reimbursement
Healthcare Reform Changes
Paperless Reimbursement
FSAFEDS Grace Period
HIPAA and FSAFEDS
The HEART Act - Qualified Reservist Distribution

 

Introduction: A Valuable Benefit

Eligibility and Your Status

Open Season and Enrollment

BENEFEDS

Financial Facts

Health Care Flexible Spending Account (HCFSA)

Limited Expense Health Care Flexible Spending Accounts (LEX HCFSA)

Dependent Care (Day Care) Flexible Spending Account (DCFSA)

Filing Claims for Reimbursement

Healthcare Reform Changes

Paperless Reimbursement

FSAFEDS Grace Period

HIPAA and FSAFEDS

The HEART Act - Qualified Reservist Distribution


Introduction
The FSAFEDS Program is a valuable benefit that allows eligible employees to reduce their out-of-pocket expenses for everyday health and dependent care expenses and stretch their hard earned dollars. Eligible employees reduce their out-of-pocket costs by opening a health and/or a Dependent Care (Day Care) Flexible Spending Account (FSA). FSAs are tax-favored accounts that employers, including the Federal Government, offer under Section 125 of the Internal Revenue Code. This Section allows qualified health and dependent care expenses to be funded with pre-tax dollars via FSAs. Watch a video from the FSAFEDS Video Library to learn more about the FSAFEDS Program.

This document is the official Summary of Benefits program document for FSAFEDS.


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Flexible Spending Account (FSA)

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What is a Flexible Spending Account?
A Flexible Spending Account (FSA) is a tax-favored program offered by employers that allows their employees to pay for eligible out-of-pocket health care and dependent care expenses with pre-tax dollars. By using pre-tax dollars to pay for eligible health care and dependent care expenses, an FSA gives you an immediate discount on these expenses that equals the taxes you would otherwise pay on that money.

In other words, with an FSA, you can both reduce your taxes and get more for your money by saving from 20% to more than 40% you would normally pay for out-of-pocket health care and dependent care expenses with after-tax (as opposed to taxed) dollars.

FSAFEDS offers three types of FSAs:

  • The Health Care Flexible Spending Account (HCFSA), which can be used to pay for qualified medical costs and health care expenses that are not paid by your Federal Employees Health Benefits (FEHB) plan or any other insurance. PLEASE NOTE: A HCFSA cannot be used to pay for any type of insurance premiums, including long-term care insurance premiums.

  • The Limited Expense Health Care Flexible Spending Account (LEX HCFSA), only available to employees who enroll in a Federal Employees Health Benefits (FEHB) Program under a High Deductible Health Plan (HDHP) with a Health Savings Account (HSA). Eligible expenses are limited to dental and vision care services/products that meet the IRS definition of medical care. By using a LEX HCFSA, you can preserve the funds in your Health Savings Account to use/save for other purposes.

  • The Dependent Care (Day Care) Flexible Spending Account (DCFSA), used to pay for eligible dependent care expenses such as child care for children under age 13 or day care for anyone who you claim as a dependent on your Federal tax return who is physically or mentally incapable of self-care so that you (and your spouse, if you are married) can work, look for work, or your spouse can attend school full-time. For more information, refer to Do I, or my spouse if married, have to earn income during the year to use a Dependent Care (Day Care) FSA (DCFSA)?

To learn more, visit the FSAFEDS Video Library and watch "The Three Types of Accounts".

Your participation in any FSA is completely voluntary, and it’s important to remember that unlike other Federal benefits, your FSA election is only effective for one Benefit Period. In other words, you must enroll each year that you choose to participate. If you do not enroll during Open Season, you will not participate in the next Benefit Period, unless you experience a Qualifying Life Event (QLE) that allows you to make an election outside of Open Season. Open Season for FSAFEDS runs concurrently with the FEHB Open Season in November and December each year for enrollment in the following year. The FSAFEDS Benefit Period will always run from January 1 of the current Benefit Period through March 15 of the following year. This includes a 2 ½ month grace period from January 1 through March 15 of the following year. During the grace period, eligible expenses incurred from January 1 through March 15 of the following year can be applied towards your prior year's balance. The intent is to help account holders avoid forfeiting any of the funds they deposited in FSA accounts. It is important to carefully consider the amount you choose to elect.

OPM has adopted the grace period on behalf of all agencies and employees that are part of FSAFEDS and has also extended the filing deadline for claims against the prior year account (including claims incurred during the “grace period”) to midnight Eastern Time on April 30.

FSAFEDS follows Internal Revenue Service (IRS) guidelines to determine eligible expenses and other requirements for participation in an FSA issued under Sections 105, 125, and 129 of the Internal Revenue Code.


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What’s the difference between a Health Care Flexible Spending Account, a Limited Expense Health Care Flexible Spending Account and a Dependent Care Flexible Spending Account?
A Health Care Flexible Spending Account pays for the qualified medical expenses not covered or reimbursed by your FEHB plan or any other type of insurance. It is NOT limited to only dental and vision care services/products.

Though the LEX HCFSA is similar to the HCFSA, it differs by the type of expenses it covers. The expenses are limited to dental and vision care services/products that meet the IRS definition of medical care. Also, only those employees who have a HDHP/HSA are eligible to enroll in a LEX HCFSA.

The Dependent Care (Day Care) Flexible Spending Account pays for child care or adult dependent care expenses that are necessary to allow you or your spouse to work or your spouse to attend school full-time. It also pays while you or your spouse look for work, however, it does not pay if you (or your spouse) did not find a job and have no earned income for the year. The Dependent Care (Day Care) Flexible Spending Account does NOT pay for medical care for your dependents.

Despite the differences between the accounts, each allows you to pay for qualified expenses with pre-tax dollars, money that is deducted from your paycheck before taxes are taken out by your employer - saving you 20% to 40% or more.


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How can an FSA help me?
An FSA offers tax savings by allowing you to pay for out-of-pocket expenses with pre-tax money. Without an FSA, you would still pay for these expenses, but you would do so using money remaining in your paycheck after federal (and often state and local) taxes are deducted.

  CSRS FERS
Annual Tax Savings Example* FSA No FSA FSA No FSA
 If your taxable income is:  $50,000  $50,000  $50,000  $50,000
 Pre-tax FSA contribution:  (2,000)  0  (2,000)  0
 Taxable income:  48,000  50,000  48,000  50,000
 Federal income and Social Security taxes:  (8,866)  (9,395)  (11,842)  (12,495)
 After-tax dollars spent on eligible expenses:  0  (2,000)  0  (2,000)
 Available after tax income:  39,134  38,605  36,158  35,505
 Discount with an FSA:  $529* or 26%  $653* or 33%

*This example illustrates tax savings based on 25% Federal and 7.65% FICA taxes, resulting in a 32.65% discount on eligible expenses paid through an FSA. State and local taxes are not included. Actual savings will vary based on your individual tax situation, and on whether you are covered under Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS). You may wish to consult a tax professional for more information on the tax implications of an FSA.



How Does an FSA Work?

First, you calculate your annual election(s).

When you decide to enroll in FSAFEDS each year during Open Season, you first need to determine how much money you want to elect for your account(s) for the upcoming Benefit Period. The maximum you can elect for a Benefit Period is $5,000 per DCFSA account, and beginning January 1, 2013, $2,500 per HCFSA (or LEX HCFSA). However, the household limit for a DCFSA is $5,000 ($2,500 if you are married, but filing separately). The minimum annual amount you can elect is $250 per account. Most people review their current year expenses, think about expenses they may incur in the 2-1/2 month grace period, and take into account changes that will occur in the coming year when making their annual elections. You have 14-1/2 months to use up your annual election, so you may wish to contribute more than you expect you’d spend in one year. However, you will also forfeit any monies you don’t use within those 14-1/2 months, so plan carefully. You can find our savings calculator https://www.fsafeds.com/fsafeds/fsa_calculator.asp and other resources on the FSAFEDS home page (www.FSAFEDS.com) to help you decide how much to elect for your FSAs.


Second, you actually enroll in the program.

Once you have decided on your annual election, you formally enroll in a HCFSA, a LEX HCFSA, a DCFSA, or a combination of accounts (you cannot have a HCFSA and a LEX HCFSA), and you specify your annual election(s) — that is, how much money you want to have deducted from your pay and deposited into your account(s) during the upcoming year, for you to use during the upcoming Benefit Period.

ADP Benefit Services KY, Inc. is the Third Party Administrator that oversees the day-to-day administration of FSAFEDS. You can enroll online during Open Season at www.FSAFEDS.com or if you have questions you may contact an FSAFEDS Benefits Counselor, toll-free, at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450, Monday through Friday, from 9:00 A.M. until 9:00 P.M., Eastern Time.


Next, your annual election(s) is deducted from your pay in allotments.

After you make your election for the Benefit Period, FSAFEDS directs BENEFEDS to deduct your annual election(s) in installments, called allotments. The allotments are spread evenly over the number of pay dates remaining in the Benefit Period. In certain circumstances, you may be approved to have your allotments accelerated so your annual election is taken over a lesser number of pay periods. You can accelerate your allotments during enrollment for reasons such as the two listed below:
  • If you know you are going on a period of Leave Without Pay (LWOP), you may prefer to meet your annual election amount prior to beginning your LWOP.

  • If you are a teacher, you may prefer to have your allotments match the months in the Benefit Period you are actively teaching.
Even though your enrollment may be effective, FSAFEDS will not be able to pay your claims until your employment is confirmed with your employing agency or its payroll provider. On occasion, reimbursements are delayed because of problems in setting up payroll deductions. These delays may be caused by incorrect data that was provided during enrollment, such as the wrong Social Security Number or employing agency.


Does participating in FSAFEDS cost me anything?
No. On November 24, 2003, President Bush signed the National Defense Authorization Act into law. Section 1127 of this law (Public Law 108-136) requires agencies participating in FSAFEDS to cover the administrative fee(s) on behalf of their enrolled employees.

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How do I know if I am eligible to enroll in FSAFEDS?
If you are an active employee of an Executive Branch agency, or an agency, commission, or other Federal entity that has adopted The Federal Flexible Spending Account Program, you are most likely eligible to enroll for at least one of the flexible spending accounts. Refer to the Eligibility and Status section to determine if you are eligible to enroll.

Some Federal agencies do not participate in FSAFEDS, but may offer their own FSA program to their employees. These agencies include:

  • Administrative Office of the U.S. Courts (The Federal Judiciary)
  • District of Columbia Government
  • Farm Credit Administration
  • Farm Credit System Insurance Corporation
  • Federal Deposit Insurance Corporation
  • Federal Reserve System
  • Office of the Controller of the Currency
  • Office of Thrift Supervision
  • Presidio Trust
  • U.S. Postal Service
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How does a Health Savings Account (HSA) affect my FSAFEDS eligibility?
An HSA is a special type of savings account available to individuals who enroll in a High Deductible Health Plan (HDHP) that allows you to use pre-tax salary dollars to pay for eligible health care expenses. By law, HSAs are only available to members who:
  • enroll in an HDHP
  • are not enrolled in Medicare
  • are not covered by another health plan, or
  • are not claimed as a dependent on someone else's Federal Tax return.

Your health plan credits a portion of the health plan premium to your HSA. You have the option to make additional tax-free contributions to your account, so long as total contributions do not exceed the limits established by law, generally the plan deductible. The funds can be used to pay for your plan deductible and/or qualified medical expenses that do not count towards your deductible. Deductibles are as follows: annual deductible of at least $1,200 for self, or $2,400 for family coverage.

An HSA is similar to an HCFSA in that they are funded with pre-tax salary dollars that can be used for the same type of health care expenses. There is a significant difference between the two. With an HSA, you must be in an HDHP which allows you to rollover funds from year-to-year — therefore, you are not at risk of losing unused money. You can be in any type of FEHB plan including a HDHP (or no plan) and have a HCFSA. However, with an HSA, you are no longer eligible for a “general purpose” HCFSA because both are used to pay for the same type of expenses. You are eligible for a LEX HCFSA if you are enrolled in a HDHP with an HSA. The LEX HCFSA allows you to set aside pre-tax salary dollars to pay for eligible dental and vision expenses only.

Regardless of the type of health plan in which you choose to enroll, you may still be eligible for a Dependent Care FSA which allows you to set aside pre-tax salary dollars to pay for child care and elder care for those individuals you can claim on your Federal Tax return.

FSAFEDS is not involved in the FEHB HDHP offering, so if you have questions regarding HDHPs and/or HSAs visit http://www.opm.gov/insure/health/hsa.


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Do I have to give FSAFEDS my Social Security Number to enroll?
Yes. A flexible spending account sets aside part of your salary before taxes. Since this is a payroll action, your Social Security Number is required to enroll. If you do not provide your Social Security Number, your election will not be able to be matched with your payroll provider and the deduction will not be taken from your pay, thereby voiding your election.

As part of your enrollment, you must choose a unique UserID to use when checking on your personal account(s) via the FSAFEDS web site, using the interactive voice response system by phone, or speaking with an FSAFEDS Benefits Counselor.


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How are deductions from my pay (allotments) determined?
Whenever you enroll in the program (i.e., if you enroll after Open Season, or if you are a new employee or a newly-eligible employee joining FSAFEDS in mid-year), your annual allotment will be divided by the number of pay periods remaining in the calendar year. For example, if you elect $2,000 and your agency has 26 pay periods in the calendar year, your allotment would equal $76.92 per pay period. You also have the option to accelerate your allotments if you think that you may go into a leave without pay status and/or be paid only during certain months of the year.




What is the FSAFEDS Benefit Period?
The FSAFEDS Benefit Period runs from January 1 of the current year through March 15 of the following year.


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What is the “Use or Lose” Rule?
Under IRS tax rules, you forfeit any money for which you did not incur an eligible expense under your FSA account(s) during the Benefit Period. This is known as the “use or lose” rule. When you contribute to an FSA, you agree to reduce your salary by a specified amount and your employing agency contributes that amount to an FSA for you. Since you never received that money, you can’t be taxed on it. If you were to receive the unused amount at the end of the Benefit Period, the IRS would consider this “deferred compensation”. Section 125 of the IRS Code prohibits deferred compensation, thus the “use or lose” rule. Agencies cannot provide waivers for any employee regarding funds that might be forfeited. The “use or lose” rule is why you should plan carefully, and conservatively, when making your annual FSA election. Also remember that reimbursement for expenses is generally based on when an expense is incurred, not when it is paid. To learn more, visit the FSAFEDS Video Library to watch the "Use of Lose" video.

If you are a Qualified Reservist, you may be eligible to request a Qualified Reservist Distribution (QRD) in order to avoid forfeiting money in your FSA account. Please refer to the HEART Act FAQs.

Important Note: You will FORFEIT any money that you do not use in your account(s) by the end of the Benefit Period. This is known as the “use or lose” rule. The Grace Period provides you with an additional 2 ½ months (January 1 to March 15) to incur expenses against your prior year's account. You have until midnight Eastern Time on April 30 following the end of the Benefit Period to file claims for reimbursement for eligible expenses incurred during the previous Benefit Period. We encourage you to carefully plan how much money to contribute to your account(s). The FSAFEDS Calculator at www.FSAFEDS.com can help you calculate allotments based on your individual situation, as well as indicate your potential tax savings. Neither OPM, nor your employing agency, has the authority to make any exception to this IRS rule.


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What is a Qualifying Life Event?
A Qualifying Life Event is an event defined by the Internal Revenue Service in Section 125 that allows you to change your FSA election. FSAFEDS permits all QLEs defined by the IRS. These QLEs include:

  • Change in your legal marital status (i.e., marriage, legal separation, divorce, or death of your spouse)


  • Change in employment status (for you, your spouse, or dependent) that affects eligibility for health insurance benefits


  • Change in your number of tax dependents


  • Birth or date you adopt a child, or placement for adoption


  • Death of your spouse or dependent


  • Change in your dependent's eligibility (for example, your child reaches age 13 where he/she is no longer eligible under a DCFSA)


  • Change in your child care/elder care provider or cost or coverage, such as a significant cost increase charged by your current day care provider, or a change in your day care provider. This applies to a DCFSA only. It does NOT apply to a HCFSA or LEX HCFSA.

Note: A dependent is anyone you claim on your federal income tax return or someone with whom you jointly file a federal income tax return.

If you or your dependents experience a QLE, you may enroll or change your current election(s) in the FSAFEDS Program; however, your requested change must be consistent with the event that prompted the election change. For example, if you adopt a baby, you may want to increase your HCFSA and/or DCFSA elections to accommodate the added medical expenses and/or day care costs you may incur for this adopted child. However, in general, you could not decrease your DCFSA elections for that QLE. You may wish to decrease your DCFSA, for example, if your spouse decided to stay home with your child and you no longer had eligible day care costs.

If your requested change is due to the birth or adoption of a child, the change will be retroactive to the child’s date of birth, date of adoption, or placement for adoption, consistent with the requirements of the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

If you are a Federal employee and experience a QLE, such as the death of your spouse, you may enroll in the FSAFEDS Program.

Additionally, you cannot reduce your HCFSA, LEX HCFSA or DCFSA election(s) below the amount already reimbursed or already in your account.

After September 30 of any Benefit Period, only those QLEs resulting in a decrease in the annual election will be considered. QLEs resulting in an increase in the annual election or a first time enrollment will not be accepted due to the limited number of pay periods remaining in the calendar year.

To learn more, visit the FSAFEDS Video Library to watch the "Qualifying Life Events" video.


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How can I keep track of my account?
You can check your account status, including account balance, claim information, last reimbursement, and update your demographic information via the Internet or by our automated phone system 24-hours-a-day, 7-days-a-week.

  • Go to www.FSAFEDS.com and click on My Account Summary. Enter your Last Name, the UserID you chose during enrollment, and your password for secure online access to your account.
  • Call 1-877-FSAFEDS (372-3337) to use the automated information system.
  • Contact an FSAFEDS Benefits Counselor toll-free at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450, Monday through Friday, 9:00 A.M. until 9:00 P.M., Eastern Time, excluding holidays.

FSAFEDS also keeps you up-to-date on your account via the reimbursement statements that are generated each time you submit a claim. You will receive your reimbursement statement via email if FSAFEDS has your current email address on file. If you have not provided an email address, your reimbursement statement will be sent by U.S. Mail.

If your claim is denied in part or in full, your reimbursement statement will include information on what you need to do to have your claim reconsidered. This statement will include an ineligible code(s) along with an explanation of why your claim was denied. Of course, you can review all your account activity at any time by going to My Account Summary and selecting “My Claims” on the FSAFEDS web site.

FSAFEDS has a minimum reimbursement threshold of $25.00. If your claim does not total $25.00, it will be processed and you will receive a reimbursement statement, but your payment will be pended until you submit another claim and reach the $25.00 aggregate amount, or until the end of the quarter, whichever comes first.

In addition, FSAFEDS will send your account statement (via email, if you have provided your email address) no later than October during the Benefit Period, which will give you a current account summary, and again in late January (the 13th month of the Benefit Period). If you still have a balance in your account, we will send you another statement in March reminding you to submit all claims for the Benefit Period no later than midnight Eastern Time on April 30.


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How do I appeal a claim that has been denied?
You have the right to appeal any FSAFEDS denial that involves your Health Care, Limited Expense Health Care, and/or Dependent Care (Day Care) Flexible Spending Account, including:

  • A claim or request for reimbursement that is not paid in full
  • A product or service determined to be ineligible that you believe is eligible
  • Your request to change your election due to a Qualifying Life Event that is not approved

STEP 1: Informal Appeal

If you disagree with our decision, or do not understand why your claim for reimbursement had been denied in part, or in full, you may contact an FSAFEDS Benefits Counselor within 30 calendar days from the date of the decision to request a more detailed explanation. You may contact FSAFEDS via email, telephone, fax or mail:

  • Email: FSAFEDS@adp.com


  • Telephone: 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450


  • Fax: 1-866-643-2245 (toll-free) or 1-502-267-2233


  • Mail: FSAFEDS Program  ·  PO Box 36880  ·  Louisville, KY 40233

STEP 2: 1st Level Written Appeal


If you are not satisfied after asking us to review your claim, you may request a formal appeal by following the steps outlined below:

  • Submit your appeal request in writing to FSAFEDS for reconsideration within 60 calendar days of the initial decision.


  • Include in your appeal request:

    • An explanation as to why you disagree with the denial based on specific provisions outlined in the Summary of Benefits with Frequently Asked Questions, Internal Revenue Service regulations that govern all pre-tax benefit programs, or other written documentation available at www.FSAFEDS.com.
    • Copies of documents that support your claim, such as a physician’s letter of medical necessity, Explanation of Benefit (EOB) from your FEHB, or other insurance plan, and/or detailed bills from your provider. At your discretion, you can also submit information such as operative reports, medical records, or other medical information that supports your claim.

  • Mail or fax your appeal request and any necessary documentation to:

    • Mail: FSAFEDS Program  ·  PO Box 36880  ·  Louisville, KY 40233


    • Fax: 1-866-643-2245 (toll-free) or 1-502-267-2233

FSAFEDS has 30 calendar days from the date we receive your request to do one of the following:
  1. Approve the appeal and proceed with the appropriate processing procedures.
  2. Respond to you, in writing, that our denial is being upheld.

STEP 3: 2nd Level Written Appeal

If you do not agree with our decision to uphold the denial, FSAFEDS will allow an additional 30 calendar days for you to file another appeal for reconsideration, in writing. Upon receipt of the appeal, the FSAFEDS Appeals Committee meets to review and ensure that the appeal has been handled properly, which includes a claims processing review, any additional documentation submitted by the participant in writing and processing and communication timeframes. We respond to all second-level appeals within 30 calendar days from the date we receive your request.

If the FSAFEDS Appeals Committee approves the reimbursement, we will send you an email informing you that your claim will be processed for reimbursement.

If the FSAFEDS Appeals Committee does not approve the reimbursement, we will send you a letter informing you, based on the information provided why your claim does not meet IRS or Plan guidelines for reimbursement. The letter will also state that you have the right to file a final appeal with FSAFEDS within 30 calendar days. This final appeal will be forwarded to an Independent Third Party for review.

STEP 4: Independent Third Party Review

The Independent Third Party reviews all documentation submitted by you, and has 30 calendar days from the date the final appeal is received to review and respond in writing. This decision is final and binding on all parties. No further appeals will be considered.

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Eligibility and Status

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How do I know if I am eligible to participate in a HCFSA or LEX HCFSA?
If you are eligible for the Federal Employees Health Benefits (FEHB) Program and are an active employee of the Executive Branch or of another agency that participates in FSAFEDS, you are eligible to participate in a health care FSA with FSAFEDS. You need only be eligible to participate in FEHB — you do not need to be currently enrolled. There is no household limit on the amount of money that you can set aside for a HCFSA or LEX HCFSA, although the FSAFEDS limit per Federal employee is $2,500 ($5,000 for a “Federal couple”). If your spouse is not a “Fed”, and has access to an FSA, he or she may enroll up to the maximum of his or her own company’s health care account.

A LEX HCFSA is for employees enrolled in a Federal Employees Health Benefits (FEHB) Program High Deductible Health Plan (HDHP) with a Health Savings Account (HSA), or whose spouse is enrolled in a non-FEHB HDHP with an HSA. The LEX HCFSA is limited to eligible dental and vision expenses only. Under IRS rules, you are not eligible to contribute to an HSA and be enrolled in a FSAFEDS general purpose HCFSA at the same time. Go to http://www.opm.gov/hsa if you want to learn more about HDHPs and HSAs.


Under the IRS Code, annuitants (other than re-employed annuitants whose employment status is full-time) cannot participate in an FSA. An FSA is a way to set aside part of your salary – before taxes – for payment of eligible expenses. An annuity is not considered salary.


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How do I know if I am eligible to participate in a DCFSA?
If you are an active employee of the Executive Branch or of another agency that participates in FSAFEDS, you are eligible to participate in a DCFSA with FSAFEDS. The only exception(s) are intermittent or “when actually employed” (WAE) employees who are expected to work less than six months in a calendar year. Also, there is a $5,000 household limit ($2,500 if married, filing separately) on the amount that can be set aside in a DCFSA. It’s very important to discuss your elections with your spouse to ensure the household limit is not exceeded. If you and your spouse elect more than the $5,000 household limit, FSAFEDS will not be able to cancel your election per IRS guidelines. You will need to resolve the over-deduction through your federal income tax return.

Under the IRS Code, annuitants (other than re-employed annuitants whose employment status is full-time) cannot participate in a DCFSA. An FSA is a way to set aside pre-tax salary for payment of eligible expenses. An annuity is not considered salary.

To be reimbursed through your DCFSA for child and dependent care expenses, you must meet the following conditions:

  • You must have incurred the expenses in order for you and your spouse, if married, to work, look for work*, unless your spouse was either a full-time student, was physically or mentally incapable of self-care or each of you have earned income during the year. However, if you did not find a job and have no earned income for the year, your dependent care costs are not eligible.
  • You cannot have made the payments to someone you can claim as your dependent on your Federal Income Tax return or to your child who is under age 19.
  • Your filing status must be single, qualifying widow(er) with a dependent child, married filing jointly, or married filing separately.
  • The care must have been provided for one or more qualifying dependents identified on the form you use to claim the credit.
  • You and your spouse must maintain a home that you live in for more than half the year with the qualifying child or dependent.

* For more information, refer to Do I, or my spouse if married, have to earn income during the year to use a Dependent Care (Day Care) FSA (DCFSA)?


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Who is eligible for a Health Care and Limited Expense Health Care Flexible Spending Account?
Eligible participants for a HCFSA and LEX HCFSA are those Federal employees eligible to enroll in the FEHB program. Temporary Federal employees are eligible only upon completion of one year of continuous service with the government.

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I’m not enrolled in the FEHB program, but I’m in a position that conveys eligibility. Am I eligible for a Health Care FSA?
Yes. Eligibility for the FEHB Program is the key. You need not be enrolled in FEHB to elect a HCFSA or LEX HCFSA.


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Can annuitants participate in this program?
No. By law, annuitants (other than re-employed annuitants whose employment status is full-time) cannot participate in FSAs. FSAs are a way of setting aside pre-tax salary for payment of eligible expenses. Annuitants receive annuities, which are not salary. Re-employed annuitants must be eligible for active FEHB coverage.

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I'm Active Military - - am I eligible to participate in FSAFEDS?
No.

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What happens if I go on a period of Leave Without Pay (LWOP) and incur an expense?
If you go on a period of Leave Without Pay (LWOP) or other non-pay status during the Benefit Period, your agency will not withhold your allotment during the period you are on leave. If you go into a period of LWOP and have not pre-paid your allotment, your FSA account will be frozen and you will not be eligible for reimbursement of any health care expenses incurred during that period until you return to pay status and your allotments are successfully restarted. However, if you have a DCFSA, dependent care expenses you incur during your leave that meet IRS guidelines for eligible expenses (i.e., you must incur the expenses in order to allow you and your spouse to work, or for your spouse to attend school full-time) may be reimbursed up to your account balance. When you return to pay status, we will recalculate your allotments based on the number of pay dates remaining in the Benefit Period.

Options for coverage during a period of LWOP are based on whether your LWOP is related to a QLE. During your period of LWOP, you can continue coverage that reflects your current election so that allowable expenses you incur during your period of LWOP will be eligible for reimbursement. This can occur in one of two ways:
  • Prepay your election by accelerating your allotments prior to your period of LWOP. Allowable health care expenses incurred during your leave will be eligible for reimbursement

    • If you have a DCFSA, dependent care expenses you incur during your leave will not be eligible for reimbursement unless they meet IRS guidelines for eligible expenses. To meet these criteria, you must incur the expenses as a result of you and your spouse, if married, needing to work, looking for work, or attending school full-time during the leave. Eligible expenses may be reimbursed up to your account balance.

  • Freeze your account. You will not be eligible for reimbursement of any health care expenses incurred during that period until you return to pay status and your allotments are successfully restarted. You have until midnight Eastern Time on April 30 following the end of the Benefit Period to submit claims for eligible health care expenses incurred prior to your period of LWOP. If you return to pay status during the same Benefit Period your LWOP began, we will recalculate your allotments based on the number of pay periods remaining in the Benefit Period.

Example:

    Let's say you elected $2,600 for the Benefit Period to be deducted over 26 pay periods, resulting in a deduction of $100 per pay period. Then, you go on LWOP after 8 pay periods ($800 already deducted). That leaves $1,800 of the $2,600 to be deducted from your pay for the rest of the year. You then return to pay status with 9 pay dates remaining in the year. We would recalculate your allotments by spreading the remaining $1,800 over the remaining 9 pay dates. Your "new" deduction would be $200 per pay period so that your account is funded in full by the last day of the year.

If your period of LWOP is related to a QLE, you have the additional option of canceling your election for the remainder of the year and reducing your coverage to the amount deposited as of the start of your leave. Expenses you incur during your leave will not be eligible for reimbursement under any of your FSAs.

Example:

    Mike Emerson goes on LWOP effective October 1, 2011. He returns to his position on January 15, 2012.

    Mike can file claims for reimbursement for HCFSA expenses incurred up to his October 1 leave date, but any expenses incurred from October through his January return date are ineligible for reimbursement, unless he prepaid his allotments.

Please note that LWOP is not a Qualifying Life Event, unless activated to military service.


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What happens if I go on non-pay status and my agency continues to pay my FEHB premiums?
If you go on non-pay status during the Benefit Period, and have not pre-paid your allotment, your FSA account will be frozen and you will not be eligible for reimbursement of any health care expenses incurred during that period, even if your employer continues to pay your FEHB premiums for medical coverage.

Your options for coverage while you’re on non-pay status are the same as those for someone on Leave Without Pay (LWOP). You may accelerate your allotments prior to going on non-pay status, or your account will be frozen until you return to pay status and your allotments are successfully restarted (in which case, we would recalculate your allotments based on the number of pay periods remaining in the Benefit Period).

However, if you have a DCFSA, dependent care expenses you incur during your leave that meet IRS guidelines for eligible expenses i.e., you must incur the expenses in order to allow you and your spouse to work, or for your spouse to attend school full-time) may be reimbursed up to your account balance. When you return to pay status, we will recalculate your allotments based on the number of pay dates remaining in the Benefit Period.



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When does my participation in FSAFEDS end?
Your participation in FSAFEDS ends when:

  1. You decide not to make an FSA election during the Open Season for the upcoming Benefit Period. Your participation then stops at the end of the current Benefit Period.
  2. Your employment status changes and you lose your eligibility.
  3. You separate from the Federal Government.
  4. You transfer to a Federal agency that is not covered by FSAFEDS.
  5. You do not respond to communications from BENEFEDS or FSAFEDS requesting updated information from you.

Please note, in any of the above listed scenarios (other than #1), your participation in FSAFEDS stops as of your termination date, or the last day of the pay period in which FSAFEDS received an allotment.

In addition, any expenses you incur after your participation ends are not eligible for reimbursement.


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What happens if I separate or retire before the end of the Plan Year?
The balances in your HCFSA, LEX HCFSA and DCFSA are treated differently if you separate or retire before the end of the calendar year.

Your HCFSA or LEX HCFSA will terminate as of the date of your separation or retirement. There are no extensions. Any eligible health care expenses incurred prior to the date of separation will still be reimbursed but those incurred after the separation date are not reimbursable, even if you accelerated your allotments. If you used your entire elected amount before FSAFEDS has deducted it from your pay, you will not be responsible for the remaining allotments.

Your DCFSA remaining balance can continue to be used to pay for eligible dependent care expenses until your account balance is depleted or the end of the calendar year, whichever comes first.

Please note, in order to take advantage of the grace period for any account, you must be actively employed and making allotments through December 31 of the Benefit Period.

For example:

    Richard Martinez is enrolled in both a HCFSA and DCFSA for the 2013 Benefit Period and retires on July 1, 2013. He may only submit claims for health care expenses which are incurred prior to his July 1, 2013 separation date, but he can continue to incur dependent care expenses through December 31, 2013 or until his balance is depleted. He would not be eligible for the grace period under either account.


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If I separate or retire from service, can I receive the remaining balance in my HCFSA or LEX HCFSA?
No. You can only be reimbursed for the expenses incurred prior to the date of separation/retirement even if you have accelerated your allotments. You are not eligible for reimbursement even if there is still money in your HCFSA or LEX HCFSA to pay these expenses.

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What if I accelerate my allotments and then decide to separate?
You can only be reimbursed for health care expenses incurred prior to the date of separation/retirement even if you have accelerated your allotments. You are not eligible for reimbursement even if there is still money in your HCFSA or LEX HCFSA to pay these expenses. You can continue to use the remaining balance in your DCFSA to pay for eligible dependent care expenses until the end of the Benefit Period or until your account balance is depleted, whichever comes first.

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If I separate but return to work for another government agency, will my FSA be reinstated?
Your previous election will be reinstated as long as you return to work for an agency that is covered under FSAFEDS within 60 days of your separation and before the end of the same Benefit Period. You may not change the amount of your election. FSAFEDS will recalculate your allotments to ensure you meet your annual election.

If you return after 60 days of your separation within the same Benefit Period, you will have an opportunity to make a new election. Please note any expenses you incurred during the time period in which you were not an active employee will not be eligible for reimbursement.

It is your responsibility to notify FSAFEDS if you are leaving, transferring, or re-joining a Federal agency that participates in FSAFEDS. Please contact FSAFEDS as soon as possible at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450, Monday through Friday, 9:00 A.M. until 9:00 P.M., Eastern Time, and provide us with this information to ensure a seamless transition.


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What happens if I change agencies during the Benefit Period?
As long as your new agency participates in FSAFEDS, your account will remain active, but you must notify FSAFEDS as soon as possible to ensure there is no disruption in service. Your participation terminates if you transfer to an agency that is not covered by FSAFEDS.

You can reach us via email at FSAFEDS@adp.com or, toll-free, at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450, Monday through Friday, 9:00 a.m. until 9:00 p.m., Eastern Time.


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If I return to work after 60 days of my separation within the same Benefit Period, is there a limit for my DCFSA election?
Yes, your new election combined with your previous election should not exceed the maximum amount of $5,000 per household ($2,500 if married filing separately).

Please see The Dependent Care (Day Care) Flexible Spending Account (DCFSA) for more information.


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What happens to eligible expenses if the FSA account holder dies?
If the FSAFEDS enrollee dies before the end of the Benefit Period, the account holder’s surviving spouse/dependent(s) and/or estate may submit claims or receive payment for eligible expenses incurred through the account holder’s date of death. Expenses incurred after the date of death are not eligible for reimbursement. In addition to submitting the claim form and supporting documentation (e.g., receipts, LMN, etc.), please provide the name and address of the executor/executrix of the FSAFEDS enrollee’s estate. Please refer to the FSAFEDS Condolence Letter for an example.

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Open Season and Enrollment

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How do I enroll in FSAFEDS?

Eligible employees can enroll in FSAFEDS for the upcoming Benefit Period during the Federal Benefits Open Season that is held each year during November and December. Enrollment in an FSA is completely voluntary. You must choose to enroll each year – your participation will not automatically carry over from year-to-year. To learn more, visit the FSAFEDS Video Library and watch the video titled "How Do I Enroll in FSAFEDS?".

While the FSAFEDS Open Season coincides with the Federal Benefits Open Season, it is administered very differently. Your employing agency does not play a part in the FSAFEDS enrollment process. You enroll directly with FSAFEDS, either through their web site, www.FSAFEDS.com, or by calling an FSAFEDS Benefits Counselor. To enroll in FSAFEDS via the Internet, go to www.FSAFEDS.com and click on Enroll. If you have questions during the enrollment process, contact an FSAFEDS Benefits Counselor, toll-free, at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450, Monday through Friday, 9:00 A.M. until 9:00 P.M., Eastern Time. FSAFEDS Benefits Counselors can also enroll you over the phone if you do not have access to the Internet.

After you enroll, you have the opportunity to print your confirmation for your records or save it to your PC. You will also be able to access your confirmation statement via My Account Summary. You should take the time to review your election(s) and make any changes before Open Season ends. If your election is incorrect (perhaps you entered the wrong amount for your allotment, or you enrolled in a DCFSA when you meant to select a HCFSA), you can correct your election by contacting an FSAFEDS Benefits Counselor at 1-877-FSAFEDS (1-877-372-3337), TTY: 1-800-952-0450, Monday through Friday, 9:00 A.M. until 9:00 P.M., Eastern Time. Once Open Season ends, you cannot change your enrollment unless you experience a Qualifying Life Event.

Note: If you have questions about your enrollment or how to enroll in FSAFEDS, contact FSAFEDS via email at FSAFEDS@adp.com or by contacting an FSAFEDS Benefits Counselor. Do not contact your employing agency since they do not handle FSAFEDS enrollments.


What if I couldn’t enroll during Open Season?
If you were unable to enroll during the entire Open Season for reasons outside of your control, you may qualify for a Belated Enrollment. If you wish to make a Belated Enrollment due to extenuating circumstances, you must complete the Belated Enrollment Form available at www.FSAFEDS.com. You must complete and submit this form to us within 30 days after Open Season ends to be considered.


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I am in a situation that requires me to leave the country or otherwise be unable to enroll during the Open Season although I’m still active on my agency’s payroll. Can I still enroll?
FSAFEDS will only accept a Belated Enrollment if you were unable to enroll during the entire Open Season for reasons outside of your control (e.g., you were out of the country and did not have access to the web site during the entire Open Season). If you wish to make a Belated Enrollment due to extenuating circumstances, you will need to complete a Belated Enrollment Form. The Belated Enrollment Form can be downloaded from the FSAFEDS web site. This form should be completed and returned to us within 30 days after Open Season ends.

A Belated Enrollment which has been accepted by FSAFEDS no later than December 31 following Open Season is effective on January 1. If we accept your enrollment after December 31, your Belated Enrollment will be effective the day after your election has been accepted by FSAFEDS and cannot be changed unless you experience a Qualifying Life Event. Claims for services rendered prior to the enrollment effective date will not be paid.


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How do I enroll in FSAFEDS if I am a new or newly eligible employee?
If you are a new or newly eligible employee* you have 60 days from your entry on duty date to enroll in FSAFEDS, but you must enroll prior to October 1 of any Benefit Period. If you do not enroll before October 1 you cannot participate for the current Benefit Period. You can elect an FSA for the next Benefit Period during the Federal Benefits Open Season beginning in November.

*Newly eligible employees include temporary employees who have completed one year of continuous service and are now eligible to enroll in FEHB, certain re-employed annuitants, and anyone whose appointment changes such that he or she is now eligible to enroll in the FEHB program.


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If I enroll outside of Open Season, when is my enrollment effective?
If you enroll in FSAFEDS with a Belated Enrollment or as a new/newly eligible employee, your election will generally be effective the next day after you enroll, but not before January 1. You may elect up to the full amount for the HCFSA and DCFSA. Only expenses incurred on or after your effective date through the end of the Benefit Period are eligible for reimbursement.

Example:

    Marie Darby becomes eligible for the FSAFEDS program on March 1, 2011 and elects to participate in a HCFSA. Marie purchased a three-month supply of contact lenses in January. Marie cannot receive reimbursement for the contact lenses she purchased in January, but she may submit claims for subsequent contact lens supplies purchased after her March 2 effective date.

If you are a newly eligible employee due to a QLE, your election will be effective on the first day of the first pay period that starts after your election is approved by FSAFEDS. No enrollments are accepted on or after October 1 of any Benefit Period.

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I enrolled during Open Season. When will my HCFSA, LEX HCFSA or DCFSA be effective?
Your election will be effective January 1 of the Benefit Period for an HCFSA, LEX HCFSA or DCFSA.

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When will my Belated Enrollment become effective?
If you submit a Belated Enrollment and it is accepted by FSAFEDS no later than December 31 following Open Season, your effective date will be 1/1. If we accept your enrollment after December 31, your effective date will begin the next day after you enroll and continue through the “grace period” ending March 15 of the following year. For example, if you submit a Belated Enrollment and it is accepted on January 5, your Benefit Period would be January 6 through March 15 of the following year. No one can enroll on or after October 1 for any current Benefit Period. Only expenses incurred on or after your effective date through the end of the Benefit Period are eligible for reimbursement.

In some cases, reimbursements can be delayed because of problems in setting up payroll deductions. BENEFEDS will notify you if there is a problem verifying your employment. It is important that you respond in a timely manner.


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Is there an Open Season every year? If so, when is it held?
Yes, there is an annual open season. Open Season for FSAFEDS is always held concurrently with the Federal Benefits Open Season from mid-November to mid-December. Your elections during Open Season are effective for the Benefit Period that follows. For example, your elections in the Open Season during November/December of 2011 will be effective for the Benefit Period 2012 (January 1, 2012 – March 15, 2013).

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Can I enroll outside of an Open Season?
You can only enroll outside of an Open Season if you:

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If I change my mind after Open Season ends, can I change my election?
You may not change your election unless you have a Qualifying Life Event. After you enroll, a confirmation statement will appear for you to print or save for your records. You will also be able to access your confirmation statement via My Account Summary.

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Can I change my mind during Open Season?
Yes, you may change your election and allotment amount as often as you want during the Open Season timeframe. Your last change as of midnight on the day that Open Season ends becomes your final election.

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Can I change my election after I’ve enrolled?
You cannot change your election unless you experience a Qualifying Life Event (QLE). QLEs are defined by the Internal Revenue Service in Section 125 as events that allow you to change your FSA election. QLEs include a change in marital status, number of dependents and many other situations. Please see Qualifying Life Events for additional information.

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I am a new/newly eligible employee. How long do I have to make an election?
If you are a new or newly eligible employee and you want to participate in FSAFEDS, you have 60 days after your hire date, but prior to October 1 of any Benefit Period to make an election to participate in the HCFSA, LEX HCFSA or DCFSA. These elections will be binding throughout the Benefit Period unless you experience a Qualifying Life Event. If you are hired on or after October 1 you are ineligible to participate in that Benefit Period, but can elect an FSA during the Federal Benefits Open Season held each fall for the following Benefit Period.

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As a new employee, if I choose to make an election within the 60 days, how long do I have to change my mind?
You will have until midnight on the day following the day that you enroll to change your mind. Your election is effective at midnight on the day it is received and cannot be changed unless you experience a Qualifying Life Event.

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When is my election or change in election effective?
The following chart summarizes when your election is effective:

If you enrolled Your enrollment, or enrollment change, must be submitted Your election is effective You may change your election
During Open Season By midnight on the last day of Open Season January 1 of the following year Until the last day of Open Season
Belated Any changes by midnight of the day the Belated Form is submitted. Either January 1 OR, the next day after your election is received and approved by FSAFEDS If you experience a QLE, or the next Open Season
As a new/newly eligible employee, within 60 days of becoming eligible, before October 1 Enroll within 60 days of becoming eligible. Any changes must be submitted by midnight of the day after the day it was sent. The next day after your election is received by FSAFEDS If you experience a QLE, or the next Open Season
As a result of a QLE, before October 1 A QLE must be submitted 31 days before to 60 days after the date of the event The first day of the first pay period that starts after approval of the Qualifying Life Event and verification of the event by FSAFEDS. If the change is requested due to the birth or adoption of a child, the change will be effective retroactively to the date of birth or placement for adoption. If you experience a second QLE, or the next Open Season
As a result of a QLE with a decrease in your election, on or after October 1 A QLE must be submitted 31 days before to 60 days after the date of the event The first day of the first pay period that starts after approval of the Qualifying Life Event and verification of the event by FSAFEDS. If the change is requested due to the birth or adoption of a child, the change will be effective retroactively to the date of birth or placement for adoption. If you experience a second QLE, or the next Open Season

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I did not enroll in a HCFSA, LEX HCFSA or DCFSA during Open Season. Will I have an opportunity to enroll at a later date?
Unless you are a new or newly eligible employee, experience a Qualifying Life Event (QLE), or qualify for a Belated Enrollment, you can only enroll in FSAFEDS during the annual Open Season.

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Can I elect to allot money to a DCFSA but not a HCFSA or LEX HCFSA, or vice-versa?
Yes. You can enroll in only one of the accounts.

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Can I still enroll in FSAFEDS if I do not have a bank account?
Yes. If you do not have a bank account you may still enroll in FSAFEDS. To enroll, contact an FSAFEDS Benefits Counselor at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450. You will need to provide evidence that you do not have a bank account or that your banking institution does not accept Electronic Funds Transfer (EFT). You would need to provide a statement from your bank or show that you receive hard copy paychecks from your payroll provider.

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BENEFEDS

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What is BENEFEDS and is it related to FSAFEDS?
BENEFEDS is the administrative system authorized by the Office of Personnel Management to handle payroll deduction functions for FSAFEDS as well as the Federal Employees Dental and Vision Insurance Program (FEDVIP). BENEFEDS works directly with ADP Benefit Services KY, Inc., the third party administrator for FSAFEDS, and Federal agencies to process payroll deductions of your FSAFEDS allotments.


Why would BENEFEDS contact me?
BENEFEDS will try to contact you if they require additional information in order to process allotments on behalf of FSAFEDS, or to notify you of a change in regards to your allotments. The reasons they would send a communication include:

  • a change in your annual elections due to a Qualifying Life Event
  • one or more missed allotments
  • you just returned from a period of Leave Without Pay

If information is required, you need to respond to BENEFEDS promptly in order to prevent suspension of your account.



I received an email and/or letter from BENEFEDS and don't know how to respond to it.
Please be assured that emails or letters you send to, or receive from BENEFEDS are legitimate and the information received is used solely to establish your FSAFEDS account.


How do I contact BENEFEDS if I need to ask a question?
You can call BENEFEDS toll-free at 1-877-888-FEDS (1-877-888-3337), Monday through Friday. You may also find additional information about BENEFEDS at their website www.BENEFEDS.com.

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Financial Facts

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Is there a maximum or minimum amount that I can allot for a flexible spending account?
The maximum annual election is $2,500 for the HCFSA and $2,500 for the LEX HCFSA per participant. The DCFSA maximum annual election is $5,000.00 per household or $2,500.00 if married, filing separately. The minimum annual election for Health Care FSA, Limited Expense FSA and Dependent Care (Day Care) FSA is $250.00.


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My spouse has an FSA program at work too. Can I still contribute the full $2,500 to the HCFSA even if my spouse is contributing at his/her workplace?
Yes, you can. There is no household limit on the amount that can be set aside for a Health Care Flexible Spending Account or Limited Expense Health Care Flexible Spending Account. The only limits are based on specific plan limits; for instance, in FSAFEDS you can elect a minimum of $250 and up to $2,500 for either account.


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My spouse has an FSA program at work too. Can I still contribute the full $5,000 to the DCFSA even if my spouse is contributing at his/her workplace?
No. The total that each family can elect for a Dependent Care (Day Care) FSA must not exceed $5,000 per household ($2,500 each if married and filing separately) in accordance with IRS rules. Therefore, you must ensure that you and your spouse limit your individual elections to total no more than $5,000 combined.

A DCFSA allows you to be reimbursed on a pre-tax basis for childcare or adult dependent care expenses for qualified dependents that are necessary to allow you or your spouse to work, look for work, or your spouse to attend school full-time. You (and your spouse if you are married) must have earned income during the year, however if your spouse attends school full-time he or she does not have to earn income during the year. Under Internal Revenue Code Section 129 (see sections 129(a)(2)(A) and 129(b)(1)), the maximum amount that can be elected for a DCFSA is limited to the lesser of:

  • $5,000 for single individuals or married couples filing joint returns;
  • $2,500 for married couples filing separate returns,
  • the employee's earned income (if less than $5,000/$2,500) or
  • the spouse's earned income (if less than $5,000/$2,500).
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Can I cancel my FEHB enrollment and elect to have the Government contribution toward FEHB premiums paid into my FSA instead?
No, you cannot. There is no provision to allow this.


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If I elect to contribute to both a Health Care FSA or Limited Expense Health Care FSA and a Dependent Care (Day Care) FSA and I exhaust all of my health care money, can I use my dependent care account to pay for health care expenses?
No. The Health Care, Limited Expense Health Care and Dependent Care (Day Care) FSAs are separate accounts and money cannot be transferred between or among them, nor can claims be reimbursed that are not consistent with the expense eligibility requirement for each account.


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If I didn't use all the money allotted to my FSA during the year, can I get the money refunded to me?
No, the IRS specifically prohibits this. Participants have until March 15 of the following year to incur eligible expenses and money remaining in your account after that date will be forfeited. You will forfeit any money not claimed by midnight Eastern Time on April 30 following the end of the Benefit Period. This is the major reason employees need to be conservative in their estimate of how much money to allocate to an FSA.

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Can my agency provide a waiver for me to recoup any funds remaining in my flexible spending account?
No. Your agency does not have the authority to provide waivers for you or any employee regarding funds that may be forfeited. Getting reimbursed for monies remaining in your FSAs after the Benefit Period ends is considered deferred compensation and therefore expressly prohibited by IRC Section 125. Please see the FAQ titled "What is the use or lose rule?” for more information about the use or lose rule.


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What happens to the forfeited money?
For FSAFEDS, forfeited funds are set aside to offset future administrative costs incurred by ADP for administering the program for the Federal government.

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Is the money I elect to an FSA insured in any way? What if ADP Benefit Services KY, Inc. (the Third Party Administrator of FSAFEDS) goes bankrupt?
FSAFEDS allotments do not belong to ADP - they belong to the Plan. As the administrator, ADP collects and maintains your allotments in a separate concentration bank account insured by the Federal Deposit Insurance Corporation (FDIC) and dedicated specifically to FSAFEDS. This money is completely separate from ADP operation accounts, and is not part of ADP assets. If ADP were to declare bankruptcy, FSAFEDS funds would still be available, and would not be subject to ADP creditors’ claims. The money would be transferred to the FSA administrator that replaced ADP. This scenario is very unlikely as ADP is one of the largest FSA administrators in the country and financially strong.

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Do I have to submit all my claims before the end of the year?
No. You have until midnight Eastern Time on April 30 following the end of the Benefit Period to submit health care and dependent care claims. Generally, all eligible expenses must be incurred by March 15 of the following year regardless of when they were paid. For example, if you visit the dentist on February 28 but do not pay until March 18, the eligible expenses for this visit are reimbursable. An exception to the general rule is made for expenses for services that are sometimes pre-paid, such as initial payments for orthodontia expenses.

For more information, refer to the FAQ titled "What is the FSAFEDS Grace Period?"


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What if the amount I received for reimbursement is more than I requested?
If you receive more than you requested, or are owed, you need to notify us of the overpayment. FSAFEDS will work with you to reconcile the overpayment. There are a couple of ways in which the overpayment can be satisfied:
  • Apply future claims to satisfy the overpayment
  • Resolve the overpayment by sending a check to FSAFEDS to apply to your account

In both cases, we will notify you of the overpayment and your options.

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What if my agency withholds the wrong amount? What happens then?
If you notice an error regarding your allotment, you should notify FSAFEDS. FSAFEDS will work with BENEFEDS to determine the required course of action.

If the error results in the allotments being less than your scheduled amount, your allotments will be recalculated based on the number of pay dates remaining in the Benefit Period.

Example:

    Let's say you elected $2,600 for the Benefit Period to be deducted over 26 pay periods, resulting in a per pay date allotment of $100. Then, your payroll provider fails to withhold your scheduled allotment on pay period 9 ($800 already deducted). That leaves $1,800 of the $2,600 to be deducted from your pay for the rest of the year. We would recalculate your allotments by spreading the remaining $1,800 over the remaining 16 pay periods. Your "new" allotment would be $112.50 per pay period so that your account is funded in full by the last payday of the year.

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What if FSAFEDS cannot take an allotment from my pay?
In some cases, such as a tax levy or wage garnishment, there are not enough funds left for your FSAFEDS allotment.

In these situations, or any others where we are unable to receive an allotment, FSAFEDS will work with BENEFEDS to determine the correct course of action. You will be unable to receive reimbursements for claims with dates of service during this period of time, until we are able to restart your allotments.

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Are there any negative factors to the tax savings through an FSA?
While almost all employees benefit from the tax savings, your pre-tax contributions may slightly reduce your Social Security benefits at retirement. However, the value of your current year tax savings will more than offset the very slight reduction in Social Security benefits that occurs in future years. While it does not compute Social Security benefits, the FSAFEDS Calculator will allow you to view your potential tax savings. You should consult a tax professional for specific questions about your situation.


I have switched to a different bank account. How do I update my Electronic Funds Transfer (EFT) information?
If your banking information changes, you may update it by logging into "My Account Summary" and choosing EFT Information from the left-hand menu.



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Health Care Flexible Spending Account (HCFSA)

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What is a Health Care Flexible Spending Account?
A Health Care FSA (HCFSA) helps you pay for eligible health care expenses that are not covered or reimbursed by FEHB, FEDVIP or any other insurance. A HCFSA is not insurance, but it can help you get more for your money by using pre-tax dollars to stretch the money you would normally spend out-of-pocket on health care services.

You make an annual election to a HCFSA. That election is taken from your salary in equal allotments before any taxes are calculated. Since your taxable income is reduced, you owe less tax. And, since the money allotted to your HCFSA is taken before taxes, that money goes much further. You have 20% – 40% more dollars to pay for eligible health care expenses, depending upon your tax situation and retirement plan. Your employing agency makes no contribution to the program, but your agency will pay all administrative fees associated with FSAFEDS on your behalf. The maximum amount you can allot to a HCFSA is $2,500 (per individual) for a Benefit Period and the minimum is $250.

The Federal workforce includes a number of employees married to each other. If each spouse/employee is eligible for FEHB coverage, both may enroll for a HCFSA up to the maximum of $2,500 each ($5,000 total). Both are covered under each other’s HCFSA. A HCFSA cannot be used to pay for health insurance, life insurance, long term care insurance or any other insurance premiums, or costs for Temporary Continuation of Coverage (TCC). To learn more, visit the FSAFEDS Video Library and watch the "Health Care FSA" video.


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Can I submit health care expenses that my family incurs for reimbursement from my HCFSA account?
Yes. You may request reimbursement for health care expenses incurred by you, your spouse and/or any of your dependents that you can claim on your tax return. You may also submit claims for eligible health care expenses incurred by your adult child through age 26. Please refer to the FAQ regarding healthcare reform and new rules regarding adult children for more information.

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I have self-only FEHB coverage. Can I still submit expenses for other members of my family?
Yes, as long as you are able to claim them as a dependent on your Federal Tax return. Your HCFSA dependent is different than your FEHB dependent.

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Is there a limit for a HCFSA contribution?
The maximum annual election for the FSAFEDS HCFSA is $2,500 per covered employee, or $5,000 for a “Federal couple”, where both spouses are covered under the FSAFEDS program. However there is no household limit for a HCFSA, so you or your spouse may enroll through FSAFEDS or another plan. Thus, the combined HCFSA election for a couple may exceed the $2,500 FSAFEDS maximum.

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Are expenses paid with an HCFSA tax deductible?
If you use a HCFSA to pay for eligible health care expenses, you cannot deduct those same expenses on your federal income tax return. However, your entire FSA allotment is pre-tax. If you itemize your medical expenses on your tax return, you can only deduct the amount of your total medical expenses that exceed 10% of your Adjusted Gross Income (AGI). By contrast, when you use a HCFSA to pay for medical and health care expenses, you receive a tax deduction without having to meet the 10% AGI minimum. The money you allot to an FSA is also exempt from FICA (Social Security and Medicare) taxes, a deduction that is not available on your federal income tax return. If your eligible medical expenses exceed the 10% threshold by a significant amount, you might want to consult with a tax professional to determine which option is best for you.

If you are enrolled in the Civil Service Retirement System (CSRS), your tax savings will be decreased by 6.2%, since you do not contribute to Social Security. Please refer to the FSAFEDS Calculator on the FSAFEDS web site.

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Does a Health Care FSA replace my insurance plan?
No! A Health Care FSA is not insurance. It simply pays for your eligible out-of-pocket health care expenses with pre-tax money. First, your claim is generally submitted to your FEHB plan, FEDVIP plan or other insurance carrier to consider your health care, dental, or vision expenses. You can then submit the remaining out-of-pocket eligible expenses, together with your plan's Explanation of Benefits (EOB)or detailed statement from your provider, to FSAFEDS for reimbursement from your Health Care FSA. Your co-payments would not require an Explanation of Benefits but would require a detailed receipt(s). If you have out-of-pocket expenses not covered by your health plan, or that you do not wish to submit for reimbursement under your FEHB, FEDVIP or any other health plan, you will need to submit a detailed receipt.


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Can I deduct expenses reimbursed by my Health Care FSA on my tax return as a medical expense?
No, you cannot because you have already received reimbursement with tax-free dollars through your FSA.


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Why should I use an FSA for health care expenses rather than deducting the expenses on my income tax return?
Only medical expenses that exceed 10% of your Adjusted Gross Income (AGI) can be deducted on your Federal Income Tax form. However, FSAs are tax-free from the first dollar. You do not have to meet the 10% AGI minimum before receiving the deduction. Further, money set aside through an FSA is also exempt from FICA (Social Security and Medicare) taxes. This exemption is not available on your federal income tax return. However, you may wish to consult with a tax professional to determine which option is best for you.

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When is my HCFSA account available to me, and how do I know how much is available?
Your HCFSA is activated once your employment is verified through your employing agency or its payroll office. You may check your account balance by going to My Account Summary.

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Will the money I elect for the Health Care FSA be paid directly to my provider?
No. Payment is made to you via Electronic Funds Transfer (EFT).


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Can I elect to use dollars in my HCFSA for premiums for other insurance policies such as long-term care insurance, Temporary Continuation of Coverage (TCC), or group retiree policies (from a previous employer)?
No. The Internal Revenue Code (which governs how all flexible spending arrangements operate) does not permit you to pay insurance premiums from monies allotted to a HCFSA.

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Are there limitations that apply to HCFSAs when both spouses have accounts?
Unlike DCFSAs, there is no maximum HCFSA allotment specified by law. While the maximum permitted under FSAFEDS is $2,500 per covered employee, you or your spouse may have another FSA available through another employer plan or FSAFEDS. Thus, the combined HCFSA allotments for a working couple may exceed the $2,500 FSAFEDS maximum per individual employee.

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When is a health care expense eligible?
A health care expense is eligible for reimbursement when a covered service is rendered during the Benefit Period in which you are enrolled, such as:

  • a visit to a health care provider or a provider comes to your home
  • a prescription is filled by a pharmacist (or the date of service indicated on your receipt if the fill date is not included)
  • a piece of home medical equipment is delivered to your home
  • you pay for an eligible over-the-counter product, such as bandages
  • you pay for an eligible over-the-counter medicine with a prescription

Examples:

    Sherry Carver had a prescription filled for her son’s ear infection on March 13, 2012. She submitted her claim for reimbursement with a copy of the prescription on March 20, 2012. Sherry incurred the eligible expense when her child’s prescription was filled before March 15 therefore, she will be reimbursed from her 2011 HCFSA because the expense was incurred during the grace period.

    However, Sherry also had a prescription written for her on March 13, 2012 for asthma medication, but did not bring it to the pharmacy until March 17, 2012. FSAFEDS will reimburse Sherry from her 2012 HCFSA because the expense was incurred after the end of the grace period.

Orthodontia expenses are handled a little differently. Since there is often little direct relationship between when a person visits the orthodontist and when you pay for orthodontia, any orthodontia expenses paid within a Benefit Period are reimbursable regardless of the date of service. Please refer to the Orthodontia QRG for more information.

Examples:

    Vienna Vendrell’s son had braces applied on April 1, 2012. Vienna entered into a payment arrangement to pay the orthodontist’s total $3,000 cost in monthly installments of $100, starting April 1, 2012. Her $100 per month payments would be reimbursable in the 2012 Benefit Period.

Another exception is home medical equipment (HME) that is rented rather than purchased. If your FEHB plan or your provider decides that it is more prudent to rent the equipment rather than purchase, you can submit a claim each month for your out-of-pocket expense.

Example:

    Tim Donovan has sleep apnea. His physician writes an order for a Continuous Positive Airway Pressure (CPAP) unit to see if that will improve his sleep. The HME vendor delivers and installs the unit in Tim’s home. The CPAP device is scheduled to be rented for six months. The HME company submits a claim every month to Tim’s FEHB plan. When Tim receives his Explanation Of Benefits, he submits that along with a completed FSAFEDS claim form for reimbursement.

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What expenses are eligible for reimbursement?
Many of your typical out-of-pocket health care expenses may be reimbursed by a HCFSA. Some common reimbursable expenses not covered by most FEHB or FEDVIP plans are listed below. All of these items meet IRS criteria for a covered medical expense. For more complete listings of eligible medical expenses, please refer to FSAFEDS Eligible Expenses Juke Box, OTC Quick Reference Guide, and IRS Publication 502. You may also contact an FSAFEDS Benefits Counselor at 1-877-FSAFEDS (372-3337), TTY line: 1-800-952-0450 Monday through Friday, from 9:00 a.m. until 9:00 p.m., Eastern Time.

  • Chiropractic services
  • Co-insurance, co-pay amounts and deductibles
  • Contact lenses and cleaning solutions
  • Dental care and procedures not covered under a FEDVIP plan (including crowns, endodontic services, implants, oral surgery, periodontal services and sealants)
  • Eye surgery not covered under a FEDVIP plan (cataract, LASIK, corneal rings, radial keratotomy, etc.)
  • Eyeglasses not covered under a FEDVIP plan (including prescription sunglasses and over-the-counter reading glasses)
  • Hearing aids and batteries
  • Infertility treatments
  • Orthodontia not covered under a FEDVIP plan
  • Over-the-counter (OTC) items (including sunscreen, bandages and contact lens solution)
  • Over-the-counter (OTC) medicines and drugs (including antacids, allergy medicines, cold medicines and pain relievers) when accompanied by a prescription. Please note: As of January 1, 2012 all OTC medicines/drugs (excluding insulin) will require a physician's prescription in order to be considered for reimbursement. See the FSAFEDS OTC Quick Reference Guide for more information.

Note: Insurance premiums, including health insurance, life insurance, long-term care insurance and Temporary Continuation of Coverage, are not eligible for reimbursement.

What expenses are eligible for reimbursement only if medically necessary?
Some expenses are eligible for reimbursement only when a doctor or other licensed health care practitioner certifies that they are medically necessary. Your doctor’s certification (note or letter) must indicate your specific medical disorder, the specific treatment needed, how this treatment will alleviate your medical condition, and the length of treatment required. Examples include:

  • Air conditioners, central air, heaters, and humidifiers installed in your home for allergy relief
  • Cosmetic surgery following an accident, disease or other surgery
  • Home Medical Equipment (e.g., reclining chairs, bed boards, special mattress)
  • Hydrotherapy
  • Water fluoridation units
  • Weight loss program for treatment of a specific disease (e.g., heart disease), not including cost of food
  • Wigs for hair loss due to chemotherapy or radiation treatment

FSAFEDS has a sample Letter of Medical Necessity (LMN) that you and your health care provider can use. A personal letter from your provider will also suffice as long as it includes all the information necessary to determine medical necessity. Please note, if the treatment extends beyond the time period listed, you need to submit a new certification/physician letter covering the new time period. You must also submit a new LMN each year that you participate - the length of time cannot be indefinite.


If the letter or note does not contain all of the information listed below, your letter may be denied.

  • Date
  • Employee Name and SSN/UserID
  • Patient Name
  • Diagnosis (specific medical condition or disorder)
  • CPT Code assigned to your diagnosis
  • Specific treatment prescribed by the provider
  • How the treatment will alleviate the condition
  • Duration of the treatment
  • Provider signature, license number, state and telephone number

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What expenses are NOT eligible for reimbursement?
The following is a list of common medical expenses not eligible for reimbursement. For more complete listings of eligible medical expenses, please refer to FSAFEDS Eligible Expenses Juke Box, OTC Quick Reference Guide, and IRS Publication 502. You may also contact an FSAFEDS Benefits Counselor at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450, Monday through Friday, 9:00 A.M. until 9:00 P.M., Eastern Time.

  • Insurance premiums, including those for health insurance, dental and/or vision insurance, life insurance, long-term care insurance, and Temporary Continuation of Coverage
  • Cosmetic surgery or procedures
  • Exercise and fitness programs for general health, including health club membership dues*
  • Expenses that have been reimbursed elsewhere
  • Expenses not incurred during your period of coverage
  • Fees paid to a health care provider in advance of services being rendered (this includes health maintenance fees but excludes braces. Go here for further information on orthodontia.)
  • Personal use items (items ordinarily used for personal, living or family purposes such as household disinfectants)
  • Physician charges for services that are not direct medical care, such as monthly fees for guaranteed access and quicker appointments (so-called “boutique practice or pre-paid physician fees”)

    * Fees paid for a fitness program may be an eligible expense if prescribed by a physician and substantiated by his or her statement or letter of medical necessity that treatment is necessary to alleviate a medical problem.


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What kind of over-the-counter (OTC) medicines or products are eligible for reimbursement through my HCFSA?
As of January 1, 2012 all OTC medicines or drugs (excluding insulin) will require a physician's prescription in order to be considered for reimbursement. See the OTC Quick Reference Guide for more information.

OTC products that are not medicines or drugs (such as sunscreen, bandages or contact lens solution), and are purchased to alleviate or treat a medical condition are eligible items for reimbursement through a HCFSA without a prescription. Vitamins and other dietary supplements that are merely beneficial to the general health of an individual remain ineligible for reimbursement.

Please refer to the FSAFEDS Eligible Expenses Juke Box for more detailed information about specific OTC items. If you have questions about the eligibility of certain item(s), contact an FSAFEDS Benefit Counselor at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450, Monday through Friday, 9:00 A.M. until 9:00 P.M., Eastern Time.


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What requirements must be met for an OTC drug to be eligible for reimbursement through my HCFSA?
Beginning January 1, 2012 you must have a prescription from your physician for an OTC medicine or drug (excluding insulin). Please refer to the OTC Quick Reference Guide for more information on submitting a claim for an OTC drug.
  • The item must be a medicine or drug used “primarily for the treatment or alleviation of a physical defect or illness” and would not be used but for a particular medical condition.
  • The item must not be used for general health or cosmetic purposes.
  • You, your spouse, your dependent or adult child through age 26 must use the item.
  • The expense must be for medical care during the current Benefit Period.

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What OTC items are not eligible for reimbursement?
OTC items are not eligible for reimbursement if they are normally used for general health or are used even when there is not a medical condition being treated (ex. toothpaste, mouthwash, shampoo, lotion or moisturizer that also contains sunscreen) or are cosmetic in nature (teeth whitening products, wrinkle reducers).

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Some OTC products can be used either for medical purposes or for general health/cosmetic purposes. Are these dual-purpose items reimbursable?
Any claim for a dual-purpose item (which is not a medicine or drug) must be accompanied by additional supporting documentation from a licensed medical practitioner. This documentation must:

  • Be on the licensed health care practitioner’s letterhead, prescription form, or Letter of Medical Necessity Form
  • Be dated within the current Benefit Period
  • Include a diagnosis (that is, the specific medical condition being treated)
  • Indicate how the item being purchased will directly impact this medical condition
  • Include the licensed medical practitioner’s signature
  • If the treatment could be for cosmetic purposes, specifically state that the treatment is not cosmetic in nature
  • Be included each time a claim is submitted

FSAFEDS has published an OTC Quick Reference Guide that describes the types of items that are eligible and ineligible for reimbursement. Please refer to the FSAFEDS Eligible Expenses Juke Box for examples of specific products. You can also contact an FSAFEDS Benefits Counselor toll-free at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450, Monday through Friday, 9:00 A.M. until 9:00 P.M. Eastern Time, if you have questions about the eligibility of a certain item(s).

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Am I able to claim OTC medications for income tax purposes if I choose not to participate in the HCFSA?
No, the IRS has ruled this benefit applies solely to flexible spending accounts. OTC items may not be deducted as a medical expense on your federal income tax return.

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Can I purchase large quantities of OTC drugs and medicines?
As of January 1, 2012 all OTC medicines or drugs (excluding insulin) will require a physician's prescription in order to be considered for reimbursement. Please refer to the OTC Quick Reference Guide for more information on submitting a claim for OTC medicines or drugs.
Reasonable quantities of OTC drugs are reimbursable if purchased for either existing or imminent medical conditions. If large quantities are necessary for the treatment of an existing condition, the physician's prescription must also indicate that the quantity being purchased is necessary for the treatment of the diagnosed medical condition.

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I purchased a medical product which had been used previously by another individual. Can I be reimbursed for a used item?
Items you purchase on the secondary market may be eligible or potentially eligible for reimbursement with acceptable evidence, such as detailed receipts which include the following information:
  • Type of service or name of product purchased
  • Date expense was incurred
  • Your name or your dependent’s name for whom the product was provided, except for over-the-counter medications
  • Name and address of the person or organization providing the product
  • Amount of the expense

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Are prescription drugs obtained from Canada or other countries outside the U.S. eligible for reimbursement?
In most cases, no. The Food and Drug Administration (FDA) has determined that the importation of prescription drugs from Canada and other foreign countries is illegal. However, there is one exception. If the FDA has approved the importation of prescription medicine into the U.S. under the “Compassionate Use Act”, it may be an eligible expense. You must include the following information when submitting a claim for imported prescription drugs that fall under the Compassionate Use Act:
  • the date of purchase
  • the cost of the prescription drug
  • the name of the prescription drug
  • If prescribed in the U.S.: the name and address of the prescribing physician
  • If initially prescribed in a foreign country: the name of the country, name and address of the prescribing physician and evidence that the drug is for the continuation of a treatment begun in that foreign country.
  • a copy of the FDA document that authorizes importation of the prescription drug

As a general rule, the FDA guidelines recommend that the purchase be no more than a 3 month supply. The prescription drug must be legal for sale in the country of purchase and recommended for treatment of a serious condition for which effective treatment may not be available in the United States.

For all other drugs purchased outside the U.S., the Internal Revenue Service (IRS) will not allow reimbursement for these purchases from flexible spending accounts and FSAFEDS must abide by IRS guidelines.



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How does reimbursement for orthodontia work?
You incur the expense for braces when you pay, so save your receipts. You’ll be able to submit a claim for expenses you pay during the current Benefit Period, even if the actual braces were put on before the current Benefit Period. Initial payments for orthodontia expenses can be reimbursed with a paid receipt. However, you cannot be reimbursed for any work completed prior to your effective date in the plan. For more information on eligible orthodontia expenses, view the Orthodontia Quick Reference Guide.

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I know insurance premiums aren’t qualified FSA expenses but what about co-payments and deductibles under my health insurance?
Co-payments and deductibles are eligible expenses. Be sure you save your receipts!

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Can I be reimbursed under my HCFSA for email or phone consultation with my physician?
Yes, fees associated with telephone or email consultation with your physician are eligible for reimbursement under your HCFSA.


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Are health maintenance fees for physician practices eligible for reimbursement from my HCFSA?
No. Only expenses for services actually provided/incurred are eligible for reimbursement from your HCFSA.

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Limited Expense Health Care Flexible Spending Accounts (LEX HCFSA)

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High Deductible Health Plan enrollees with a Health Savings Account cannot enroll in a HCFSA, but they have the option of selecting the Limited Expense Health Care Flexible Spending Account.


What is a Limited Expense Health Care Flexible Spending Account?
A Limited Expense Health Care Flexible Spending Account (LEX HCFSA) is a flexible spending account option for employees enrolled in a Federal Employees Health Benefits (FEHB) Program High Deductible Health Plan (HDHP) with a Health Savings Account (HSA), or whose spouse is enrolled in a non-FEHB HDHP with an HSA. The LEX HCFSA is limited to eligible dental and vision expenses only. Under IRS rules, you are not eligible to contribute to an HSA and be enrolled in a FSAFEDS general purpose HCFSA at the same time. Go to www.opm.gov/hsa if you want to learn more about HDHPs and HSAs, or visit the FSAFEDS Video Library and watch the "Limited Expense Health Care FSA" video.

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What kind of expenses does a LEX HCFSA cover?
Expenses are limited to dental and vision care services/products that meet the IRS definition of medical care. Eligible expenses include your out-of-pocket costs for such services/products as:

Dental Care:
  • Cleanings
  • Fillings
  • Crowns
  • Orthodontics
Vision Care:
  • Contact lenses
  • Eyeglasses
  • Refractions
  • Vision correction procedures
along with any eligible dental or vision over-the-counter expenses, such as denture care products, contact lens cleaning and soaking solutions, etc.

Your out-of-pocket costs for dental and vision care are the only expenses eligible for reimbursement under the FSAFEDS LEX HCFSA. Cosmetic services – whether dental or vision related - are not eligible expenses. All of the other expenses normally eligible under a “general” health care flexible spending account are NOT eligible under a LEX HCFSA.

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How does a LEX HCFSA save me money?
Using pre-tax dollars gives you an immediate discount on your eligible out-of-pocket dental and vision care expenses. By using a LEX HCFSA, you can preserve the funds in your Health Savings Account to use/save for other purposes.

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Is there a limit on how much pre-tax salary I can set aside in my LEX HCFSA for dental and vision care expenses?
You can set aside anywhere from a minimum of $250 up to $2,500 per Benefit Period. As with the HCFSA, the maximum annual allotment for the FSAFEDS LEX HCFSA is $2,500 per covered employee, or $5,000 for a “Federal couple”, where both spouses are covered under the FSAFEDS Program. However there is no household limit for a LEX HCFSA, so you or your spouse may enroll through FSAFEDS or another plan. Thus, the combined LEX HCFSA election for a couple may exceed the $2,500 FSAFEDS maximum. REMEMBER: Under IRS rules, you are not eligible to contribute to an HSA and be enrolled in a FSAFEDS general purpose HCFSA at the same time. And, if your spouse is covered separately under a non-HSA plan, his/her expenses are not eligible under your LEX HCFSA and your expenses are not eligible under your spouse’s general purpose FSA.

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Are all my dependents covered under a LEX HCFSA like they are under a general purpose health care flexible spending account?
Yes, all your dependents that you claim or are eligible to claim on your federal income tax return, or with whom you jointly file your taxes are covered.

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When can I enroll in a LEX HCFSA?
You can enroll in a LEX HCFSA during the Federal Benefits Open Season for the upcoming Benefit Period, which occurs mid-November through mid-December each year. Go to www.FSAFEDS.com and click on Enroll Now to enroll.

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How do I enroll in a LEX HCFSA?
You may enroll in a LEX HCFSA during the Federal Benefits Open Season for the upcoming Benefit Period through their web site at www.FSAFEDS.com by clicking on Enroll Now on the home page. If you have questions during the enrollment process, contact an FSAFEDS Benefits Counselor, toll-free, at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450, Monday through Friday, 9:00 A.M. until 9:00 P.M., Eastern Time.

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I was enrolled in a general purpose HCFSA last year but will be changing to a LEX HCFSA this year because I am enrolling in a HDHP with an HSA. How will this affect my account?
Your LEX HCFSA will be effective on 01/01/2014 if you enroll during Open Season. If you change from a general purpose HCFSA to a LEX HCFSA for 2014, you will not be able to fund your HSA until April 1, 2014. Since you cannot be enrolled in a general purpose HCFSA at the same time you are enrolled in an HSA, you cannot fund an HSA until the first day of the next month after the end of the grace period.

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When is my LEX HCFSA account available to me, and how do I know how much is available?
Like other flexible spending accounts, a LEX HCFSA is activated once your employment is verified through your employing agency or its payroll office. You may check your account balance by going to My Account Summary.

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MY HSA fund covers dental and vision expenses, so why would I want an FSA account too?
By establishing a LEX HCFSA, you can save money on taxes by using FSA dollars for dental and vision expenses while preserving your HSA funds for other purposes, including simply saving those funds for the future.

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Dependent Care (Day Care) Flexible Spending Account (DCFSA)

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What is a Dependent Care (Day Care) Flexible Spending Account?
A Dependent Care (Day Care) Flexible Spending Account (DCFSA) allows you to be reimbursed on a pre-tax basis for child care or adult dependent care expenses for qualified dependents that are necessary to allow you or your spouse to work, look for work (with income during the year), or your spouse to attend school full-time. However, if you did not find a job and have no earned income for the year, your dependent care costs are not eligible (see the next FAQ for more information). Your DCFSA can be used to reimburse you with pre-tax dollars if the expenses for your dependents meet the IRS definition of dependent care expenses for income tax purposes. An adult (e.g., parent, grandparent, adult disabled child) may qualify as a dependent if you are providing more than half of that person's care for the year. To learn more, visit the FSAFEDS Video Library and watch the "Dependent Care FSA" video.

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Do I, or my spouse if married, have to earn income during the year to use a Dependent Care (Day Care) FSA (DCFSA)?
A DCFSA allows you to be reimbursed on a pre-tax basis for childcare or adult dependent care expenses for qualified dependents that are necessary to allow you or your spouse to work, look for work (with income during the year), or your spouse to attend school full-time. You (and your spouse if you are married) must have earned income during the year, however if your spouse attends school full-time he or she does not need to have earned income. Under Internal Revenue Code section 129 (see sections 129(a)(2)(A) and 129(b)(1)), the maximum amount that can be elected for a DCFSA is limited to the lesser of:

  • $5,000 for single individuals or married couples filing joint returns;
  • $2,500 for married couples filing separate returns,
  • the employee's earned income (if less than $5,000/$2,500) or
  • the spouse's earned income (if less than $5,000/$2,500).

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My spouse and I both elected a Dependent Care (Day Care) FSA and our combined election exceeds the maximum $5,000 household limit. Can my FSAFEDS account be adjusted or cancelled so we do not exceed the $5,000 maximum amount?
No. Your FSA elections are irrevocable unless you experience a Qualifying Life Event (QLE). While you and your spouse will have your total household salary reduced by the amount of your combined elections, you will also probably receive that full amount in reimbursements.

When you prepare your Federal taxes during the next calendar year, you need to complete Form 2441 "Child and Dependent Care Expenses" (attached to Form 1040), and add the amount in excess of $5000 back into your income. However, if you have more than $5000 in dependent care expenses (effectively paid with after-tax dollars since you added it to your income), you may be able to use that additional amount to claim a dependent care tax credit on the Form 2441. Your excess contribution is not "lost" but can still be used to offset some dependent care expenses.

We encourage you to contact your tax advisor if you need further guidance.


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Who is a qualifying dependent for a DCFSA?
A qualifying dependent for the FSAFEDS DCFSA is your tax dependent:

  • who is under age 13, or
  • of any age (including, but not limited to, your parents and parents-in-laws), or your spouse who is mentally or physically incapable of caring for himself or herself.

To claim dependent care expenses, you must meet the following conditions:

  • You must have incurred the expenses in order for you and your spouse to work, look for work (as long as you found a job and have earned income), attend school full-time or your spouse was physically or mentally incapable of self-care.
  • The payments for care cannot be paid to someone you can claim as your dependent on your Federal income tax return or to your child who is under age 19. (However, payments can be made to a provider between ages 13-19 that you do not claim on your taxes as a dependent, or who does not live in your home.)
  • Your filing status must be single, qualifying widow(er) with a dependent child, married filing jointly, or married filing separately.
  • The care must have been provided for one or more qualifying persons identified on the form you use to claim the credit.
  • You (and, if you're married, your spouse) must maintain a home that you live in for more than half of the year with your qualifying child or dependent.

Your child must have been under age 13 when care was provided and you must be able to claim the child as an exemption on your tax return. (For an exception to this rule, see "Child of Divorced or Separated Parents" in IRS Publication 503, Child and Dependent Care Expenses.) The noncustodial parent cannot treat the child as a qualifying person even if that parent is entitled to claim the child as a dependent under the special rules for a child of divorced or separated parents. A dependent of any age (e.g., a parent) who is physically or mentally incapable of self-care also qualifies if he or she can be claimed as an exemption on your tax return (or could have been claimed, except for the fact that he or she had $3,050 or more of gross income).


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Is there a limit for a DCFSA election?
By law, the maximum amount you may allot for a DCFSA is $5,000 per household ($2,500 if married filing separately). You could exceed the $5,000 limit if both you and your spouse work for employers offering an FSA and the combined total of the allotments you each elect for a DCFSA goes beyond the applicable limit of $5,000. So, it is important that you plan carefully.

The IRS allows an income tax credit of up to $6,000 of dependent care expenses if you have two or more dependents (up to $3,000 for one dependent). The amount of the credit is based on your adjusted gross income and applies only to your Federal income taxes. So, while the maximum allowed under a DCFSA is $5,000, you may be able to apply the incremental difference between the DCFSA maximum and the Child and Dependent Care Tax Credit depending on your tax situation. For more information about this tax credit, please see IRS Form 2441 and the accompanying instructions.


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Are dependent care expenses paid with a DCFSA tax deductible?
You are not permitted to claim the same expenses on both your Federal income taxes and DCFSA, although in certain situations you may be able to take advantage of both the DCFSA and the Child and Dependent Care Tax Credit. If you have two or more qualifying individuals as dependents, the IRS allows you to apply up to $6,000 of dependent care expenses to your taxes. The maximum allowable under a DCFSA is $5,000, so you may apply the $1,000 incremental difference between the DCFSA maximum and the Child and Dependent Care Tax Credit if you have two or more dependents and your expenses exceed $5,000. The chart below helps to illustrate:

MAXIMUM ALLOWED DEDUCTION
  DCFSA Federal Tax Credit
One Dependent $5,000 $3,000
Two or More Dependents $5,000 $6,000

Note: For the Child and Dependent Care Tax Credit, which is different than your DCFSA, you may use up to $3,000 of the expenses paid in a year for one qualifying individual, or $6,000 for two or more qualifying individuals. These dollar limits must be reduced by the amount of any dependent care benefits that you exclude from your income.

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Which is better, a DCFSA or the Dependent Care Tax Credit?
It depends on your particular tax situation. You may apply up to $3,000 of expenses paid in a year for one qualifying individual, or $6,000 for two or more qualifying individuals to your taxes through the Dependent Care Tax Credit. If you have two or more dependents and your household adjusted gross income is less than $43,000, you might find the Federal tax credit to be more beneficial. However, if your household adjusted gross income exceeds $43,000, it is likely the DCFSA will provide greater tax savings. There is a Dependent Care Tax Credit Worksheet available online at www.FSAFEDS.com that can help you determine which option is best for you. If the Federal tax credit is a better option, you will need to file Form 2441 "Child and Dependent Care Expenses" when you file your Federal Income Tax return. The amount of your DCFSA election for the Benefit Period will appear in box 10 on your W-2 form.

You may wish to consult a tax professional if you are unsure which option is more beneficial for your individual tax situation.

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What should I know about a DCFSA versus Child Care Tax Credits?
Depending upon your particular tax situation, it may be more advantageous to you to use the tax credit rather than a DCFSA exclusively. The amount of the DCFSA exclusion is limited to $5,000 per tax year ($2,500 for married individuals filing separate returns). If the applicable limitation is exceeded, the excess is included in income and taxable. There is a Dependent Care Tax Credit Worksheet that can help you determine which option is best for you.

The IRS allows an income tax credit of up to $6,000 of dependent care expenses if you have two or more dependents (up to $3,000 for one dependent). The amount of the credit is based on your adjusted gross income and applies only to your Federal taxes. So, while the maximum allowed under a DCFSA is $5,000, you may be able to apply the incremental difference between the DCFSA maximum and the Child and Dependent Care Tax Credit depending on your tax situation. For more information about this tax credit, please see IRS Form 2441 and the accompanying instructions.

Please consult a tax professional if you are unsure of which option is more beneficial for your particular tax situation.

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Can I have a Dependent Care (Day Care) FSA if I receive a child care subsidy from my agency?
Yes, but any combination of DCFSA contributions and child care subsidies cannot exceed $5,000 for the year.

Examples:

    Marlene Smith is a Federal employee who has one child, age 3. She receives a $3,000 child care subsidy from her agency. She also elects a $2,000 DCFSA through her agency.

    $3,000 + $2,000 = $5,000

    Marlene is OK. She did not exceed the $5,000 limit.

    Mary Johnson is a Federal employee, married to Rick who works for ABC Company. They have two children, ages 4 and 8. Mary receives an annual subsidy of $1,500 and has a $3,000 DCFSA through her agency. Rick receives an annual subsidy of $1,000 from his employer.

    $1,500 + $3,000 + $1,000 = $5,500 - exceeding the $5,000 limit by $500

    Mary and Rick must reconcile any additional taxes owed, on the $500 that exceeded the limit, when they file their annual tax return.

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What expenses are eligible for reimbursement with a DCFSA?
You can use the DCFSA to pay eligible expenses for care of your dependent children under age 13, or for a person of any age whom you claim as a dependent on your federal income tax return and who is mentally or physically incapable of caring for himself or herself.

Examples of eligible services include:

  • Placement fees for a dependent care provider, such as an au pair (see the FAQ in this section about au pairs for more information)
  • Before and after-school care (other than tuition expenses)
  • Care of an incapacitated adult who lives with you at least eight hours a day
  • Childcare at a day camp, nursery school, or by a private sitter
  • Late pick-up fees
  • Expenses for a housekeeper whose duties include caring for an eligible dependent
  • Summer or holiday day camps, including registration fees
  • Activities in lieu of day care when the fees associated with the activity are incidental to, or cannot be separated from, the cost of care (swimming lessons, arts and crafts, music lessons, etc.)

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What expenses are NOT eligible for reimbursement by a DCFSA?
Examples of ineligible DCFSA expenses include:
  • Education or tuition fees
  • Expenses for children age 13 and older
  • Late payment fees
  • Overnight camps
  • Payment for services not yet provided (*payment in advance)
  • Field trips, clothing and food
  • Transportation to and from the dependent care provider

*Expenses can only be reimbursed after they have occurred.

When is my DCFSA account available to me, and how do I know how much is available?
Like the health care FSAs, a DCFSA is activated once your employment if verified with your employing agency or its payroll office. However, unlike the health care accounts, the current balance in your DCFSA account on the day your claim is processed is the maximum you can be reimbursed at that time. If your bill for day care exceeds what you have in your account, FSAFEDS will process your claim and reimburse you the amount in your account on the day of processing. Any eligible claim amount that exceeds the balance in your DCFSA at the time your claim is processed is pended until your next allotment is received at FSAFEDS. As soon as your next allotment is received, the remaining amount will automatically be released to you, assuming your next allotment of funds is sufficient to cover the balance of your original claim amount.

Example:

    Mysti Nelson’s bi-weekly DCFSA allotment is $400 and she pays her day care provider $500 every two weeks. At the time she submits her claim, Mysti has $400 in her account. FSAFEDS will process the claim and reimburse Mysti $400. When her next allotment is received, FSAFEDS will release the additional $100 to Mysti, without her having to complete an additional claim form.

IMPORTANT NOTE: day care expenses cannot be reimbursed until services are actually provided. In other words, pre-paid day care expenses, or expenses paid in advance, are not eligible for reimbursement under a DCFSA until the services have been rendered. Refer to the Dependent Care (Day Care) Flexible Spending Account section for more information.

You can update your EFT information at any time by visiting www.FSAFEDS.com and logging in to My Account Summary, or by completing the EFT Form and faxing it to FSAFEDS at 1-866-643-2245 (toll-free) or 1-502-267-2233.

If you are a new or newly eligible employee enrolling outside of Open Season, you may still elect the full amounts for both HCFSA and DCFSA. There is no proration. Your allotment will be divided by the number of pay periods remaining in the calendar year.

You may not transfer funds from one account to the other (e.g. from your HCFSA to your DCFSA or vice-versa) to cover unanticipated expenses, even if you have a balance in one of the accounts. Spouses may not transfer funds between each other’s accounts.

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Can I use a Dependent Care (Day Care) FSA to pay for a babysitter in my home rather than using a day care center?
Yes. You can include expenses paid to a babysitter if the services are necessary in order for you and your spouse, if married, to work, look for work*, or for your spouse to attend school full-time. However, if you did not find a job and have no earned income for the year, your dependent care costs are not eligible.

* For more information, refer to Do I, or my spouse if married, have to earn income during the year to use a Dependent Care (Day Care) FSA (DCFSA)?

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I work at night and need an overnight babysitter. Is that an eligible child care expense?
Yes. As long as the services are necessary in order for you or your spouse, if married to work, look for work*, or for your spouse to attend school full-time they are eligible dependent care costs.

* For more information, refer to Do I, or my spouse if married, have to earn income during the year to use a Dependent Care (Day Care) FSA (DCFSA)?

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My under-age-13 child goes to day camp during the summer. Is that qualified child care?
Yes, if attendance at that camp allows you and your spouse to work, look for work*, or for your spouse to attend school full-time. However, if you did not find a job and have no earned income for the year, your dependent care costs are not eligible.

* For more information, refer to Do I, or my spouse if married, have to earn income during the year to use a Dependent Care (Day Care) FSA (DCFSA)?

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My under-age-13 child goes to an overnight camp during the summer. Is that qualified child care?
No. Overnight camps or day camps that include an overnight stay are not eligible for reimbursement. The IRS Publication 503 does not recognize this as a work-related expense.

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My under-age-13 child goes to private school. Are tuition payments qualified child care?
No. School tuition is not child care. But before/after school care is a qualified expense. Your provider may be required to itemize the costs between tuition and before/after school care.

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I pay my day care center the same amount every single week. Do I have to submit a claim every week or can I set it up to automatically receive reimbursement?
You must submit a claim every time you wish to request reimbursement of an expense. There is no automated process. Many individuals file claims monthly to eliminate weekly claim submission. However, it truly depends on your specific needs and whether you can wait until the end of the month for reimbursement or if you need to receive funds weekly. Regardless of the amount on your claim you will only be reimbursed up to the amount in your account at that time.

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My child turns 13 in the middle of a week. Can I submit a bill for the whole week’s child care?
No. You can only submit a bill for the portion of the week during which your child was under age 13.

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I am thinking of having an au pair take care of my child. There is a $2,500 up-front fee and I will be paying $150 a week to the au pair. What, if any, of this qualifies as an eligible expense?
The up-front fee qualifies as an eligible child care expense if it is an expense you must pay in order to obtain care. However, you must only apply the expense proportionately over the duration of the agreement to employ the au pair. For example, for an annual agreement with an au pair who is paid weekly, 1/52nd of the placement fee would be reimbursable each week. The fee of $150 per week as well as other work related expenses may qualify as a child and dependent care expense, depending on your tax situation. Please refer to Publication 503, Child and Dependent Care Expenses for more information.

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What information do I need from a dependent care provider?
Eligible childcare providers must provide you with their SSN or TIN. The caregiver must declare your payment as taxable income. If it is a childcare center providing care for more than six non-resident children, the provider must comply with state and local regulations.

If your provider does not have a SSN or TIN, you must submit a letter indicating that you have attempted to obtain a SSN or TIN from the provider and were unable to do so, as the provider does not have one or will not provide it to you. The letter must show the name and address of the provider and should be signed by you.

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Can I send a cancelled check as supporting documentation for my Dependent Care claim?
No, you must either have the provider sign the Affidavit on Section(s) 2 and/or 5 of the claim form or attach a copy of your bill or signed receipt in order to be reimbursed. Please make sure your bill or signed receipt includes the date(s) of service.

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Filing Claims for Reimbursement

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Do I need a claim form and where do I find it?
Yes. Unless you are participating in paperless reimbursement (for HCFSA only), FSAFEDS requires that you complete and submit a claim form to FSAFEDS for processing. Click on the link to download a Health Care Claim Form or a Dependent Care Claim Form.

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How long will it take to receive reimbursement?
In almost all instances, if you fax your claim to FSAFEDS it should take no longer than 5 to 7 business days from the time you submit your claim until you receive your funds by direct deposit through Electronic Funds Transfer (EFT). Please check with your individual banking institution if you have questions regarding EFT deposits.

You will be reimbursed for eligible health care expenses after you have incurred the expense and FSAFEDS processes your claim - as long as your employment has been confirmed with your employing agency or its payroll office. However, dependent care expenses will only be paid up to the amount in your account at the time the claim is processed. If a dependent care claim cannot be paid in full, as soon as your next allotment is received, the balance will be issued to you up to the amount then in your account. Depending on your allotments and your dependent care expenses, it may take several pay periods before a DCFSA claim can be paid in full. Please note, reimbursements are based on the date that the service was provided and not when you actually paid for the service.

If you participate in paperless reimbursement, your FEHB plan or FEDVIP plan automatically forwards your claims to FSAFEDS weekly (daily if with Blue Cross Blue Shield or Mail Handlers). It may take up to 10 to 12 business days from the time your FEHB plan submits your claim until your funds are deposited into your account via EFT. The payment schedule for retail and mail-order pharmacy vendors is generally longer than what you may experience for medical, dental and vision claims. The longer payment schedule means your pharmacy claims will most likely take even longer to be reimbursed by FSAFEDS.


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How do I submit a claim for reimbursement?
There are several ways to submit your claim:

Online:

You can submit your claim online by logging into My Account Summary, clicking on My Claims, and selecting Online Claim Submission. You must upload an image of your supporting documentation in .TIF or .JPG format with your claim information.

Fax:

For faster reimbursement and notification of claims receipt, fax your claim to the FSAFEDS 24-Hour Fax line at 1-866-643-2245 (toll-free) or 1-502-267-2233.

Mail:

FSAFEDS Program
PO Box 36880
Louisville, KY 40233

Overnight Mail:

ADP Benefit Services KY, Inc.
Attn: FSAFEDS Program
11405 Bluegrass Parkway
Louisville, KY 40299

Toll-free Number:

1-877-FSAFEDS (372-3337)
TTY Line: 1-800-952-0450

Claims Confirmation:

When you fax your Health Care, Limited Expense Health Care or Dependent Care (Day Care) FSA claim to FSAFEDS, you can receive confirmation by email that your claim has been received. To take advantage of this free, convenient service, include your email address during the enrollment process when prompted and/or include your email address on the claim form when submitting your information for reimbursement.

If your claim is received prior to 4:00 P.M. Eastern Time on any given business day, you will receive your confirmation email on the same day we receive your claim. If FSAFEDS receives your claim after 4:00 P.M. Eastern Time, your confirmation email will be sent on the following business day. During high claims volume periods it may take up to 48 hours to receive your confirmation email.

Regardless of whether you have submitted claims, you will receive information by October 31 of each Benefit Period and again later in the Benefit Period notifying you of how much remains in your FSAFEDS account(s), as well as summarizing your claims processed to date. If you still have a balance in your account we will send you another statement in March reminding you that you have until midnight Eastern Time on April 30 to submit your claims for the Benefit Period.

Denial of Claims

If you submit a claim that is partially or fully denied, the FSAFEDS reimbursement statement will provide detailed information on why the claim was denied. The statement will include:

  • A specific denial code supported with reason(s) for the denial
  • A description of additional material or information you can provide to allow the claim to be reconsidered for reimbursement


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Do I have to submit my claim form and supporting documentation in English?
Yes. Your claim form must be filled out in English, and any supporting documentation submitted along with your claim must be in English, in order to be considered for reimbursement.

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Can I submit my claim form with a digital or electronic signature?
No. A hand-written signature is required on your claim form. We cannot accept digital signatures.

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I faxed separate claim forms within a few days of each other for recent expenses I incurred. Will my reimbursements be combined or deposited separately?
If you fax multiple claim forms within a few days of each other, there is a chance they will be processed on the same day. This means your total reimbursement amount may be combined and appear as one deposit. Let's look at an example:

Jane submits two separate claims. On Saturday, she faxes a health care claim for $50 and on Monday she faxes a dependent care claim for $100. FSAFEDS processes both claims on the following Friday. When we release Jane's reimbursement, a total deposit of $150 from FSAFEDS will appear in her account.


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How do I get reimbursed for my HCFSA or LEX HCFSA claims?
You must file a claim form with FSAFEDS to be reimbursed for an eligible expense. The Health Care claim form is available on the FSAFEDS web site at www.FSAFEDS.com.

With your completed claim form, you must submit one of the two items below to document your claim:

  • Explanation of Benefits Statement (EOB) – This is the statement that you typically receive each time that you, or a health care provider, submit a claim for payment to your health, dental, or vision care plan. The EOB shows the expenses paid by the plan and the amount you must pay. For expenses that are partially covered by your health care plan, your spouse’s, or other dependent’s, you must attach the EOB.

  • Acceptable Evidence – For expenses that are not covered at all by your, your spouse’s or other dependent’s health care plans, or that you elect not to submit to your FEHB plan or any other insurance you may have, you must sign the claim form verifying that the expense is not covered and/or has not been reimbursed by FEHB, FEDVIP or any other insurance. Claims will not be processed without acceptable evidence of your expenses. A cancelled check alone is not acceptable evidence. Acceptable evidence includes detailed receipts, which contain the following information:

    • Type of service or name of product purchased
    • Date expense was incurred
    • Your name or your dependent’s name for whom the service/product was provided
    • Person or organization providing the service/product
    • Amount of the expense

IMPORTANT NOTE: We cannot reimburse you for any type of expense until the actual service is incurred. This means you should submit your expenses only after the dates of service have passed. If you submit them before the dates of service have passed, we will deny your claim and you will need to resubmit. This is also true for the signature date on the claim. If your signature date is before the dates of service submitted on the claim, it will be denied because you cannot validate an expense before it’s actually provided.

If your receipt does not clearly show the name of the product, you will need to submit copies of the front of the box/container for over-the-counter (OTC) products (which are not medicines or drugs) with your claim form. Copies of the packaging, as well as your receipt are required for all OTC medicines or drugs.

Please note: As of January 1, 2012 all OTC medicines or drugs (excluding insulin) will require a physician's prescription in order to be considered for reimbursement. For more information on submitting claims for OTC medicines/drugs please refer to the OTC Quick Reference Guide.

It should take no longer than 5 to 7 business days from the time FSAFEDS receives your claim until the funds reach your bank via Electronic Funds Transfer (EFT). You can update your EFT information at any time at www.FSAFEDS.com through My Account Summary .


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How do I get reimbursed for my DCFSA claims?
You must file a claim form with FSAFEDS to be reimbursed for an eligible dependent care expense. The Dependent Care claim form is available on the FSAFEDS web site at www.FSAFEDS.com.

  • For eligible Dependent (Day) Care expenses, attach a copy of the itemized bill or signed receipt, or have the provider sign the Affidavit section of the claim form.
  • Requests will not be processed without the Tax ID Number or Social Security Number for all providers. If your provider does not have a SSN or TIN, you must submit a letter indicating that you have attempted to obtain a SSN or TIN from the provider and were unable to do so, as the provider does not have one or will not provide it to you.

You must submit a claim each time you request reimbursement for dependent care expenses, even if you regularly pay your dependent care provider the same amount each week. You will be reimbursed up to the current amount in your DCFSA at the time your claim is processed.

IMPORTANT NOTE: Payment in advance or a deposit to hold a spot for placement in a program, such as day camp or after-school care, is a reimbursable expense under a DCFSA. However, it cannot be submitted for reimbursement until after some or all of the care has been provided, since payment up-front for future services is not eligible for claim reimbursement until the actual service is rendered.

Example:

Allison Francini enrolls her three sons in a two-week summer camp in February. The camp will run in July. The camp, which is extremely popular, insists that payment be made in full at the time of registration. Since Allison has paid in advance for services, she cannot file for reimbursement until after some or all of the camp has taken place. She can either submit a claim after each week for that portion or wait and submit the full amount after the camp has taken place.

When you submit a claim, attach a copy of the bill or signed receipt to the claim form, or have your provider sign the Affidavit section on the claim form. All claims must include a TIN or SSN for all providers. If you fail to supply the appropriate documentation, your reimbursement will be delayed or may be denied. Be sure to keep a copy of the bill or signed receipt for your records.

If you terminate employment for any reason mid-year and you still have a balance in your DCFSA, you may continue to submit claims for reimbursement for eligible expenses you incur after your termination date but before the end of the Benefit Period, up to the amount of your balance.


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I’ve been reimbursed for more than what I’ve contributed. Why?
With a HCFSA and a LEX HCFSA, you have access to the full amount of your annual allotment to your FSA, even before the entire annual allotment has been deducted from your paycheck. Once your employment is verified, you can use your full HCFSA or LEX HCFSA to pay for eligible health care expenses from the very first day your account became effective.

Examples:

    Wendy Schumann elected $3,000 for her HCFSA for the Benefit Period. On January 15, Wendy’s husband incurred $2,000 in dental expenses. Although Wendy has not yet contributed $2,000 into her health care account (as of January 15), she can still receive a reimbursement for $2,000.


    Heidi Meuchner enrolled in a HCFSA as a new participant and elected $1,000 for the Benefit Period. On New Year’s Day, Heidi slipped on the ice and fell. She later went to the emergency room where an x-ray revealed a broken wrist, which was set. Heidi’s emergency room expenses are eligible for reimbursement under her HCFSA. Since it’s so early in the Benefit Period, Heidi has not had a single allotment taken from her paycheck. She can submit her expenses, but her reimbursement may be held until her employment is verified, since that is when her election is activated for the Benefit Period.


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What documentation do I need to submit for reimbursement of eligible OTC drugs and medicines?
Please note: As of January 1, 2012 all OTC medicines/drugs (excluding insulin) will require a physician's prescription in order to be considered for reimbursment. The prescription must be legible and include the following information:

  • The date
  • The name of the patient for whom the OTC medicine is prescribed
  • The name of the OTC medicine
  • The dosage requirement (the potency of the item must match the prescribed amount)
  • The provider's address and license

A Letter of Medical Necessity (LMN) will not be accepted in place of a physician's prescription.

Along with your completed and signed claim form, and prescription, you will need to submit a copy of the product label or package, along with the receipt with the price. Your signature on the claim form certifies that you, your spouse, your dependent or adult child through age 26 will use the item purchased.

Please refer to the OTC Quick Reference Guide for more information on submitting claims for OTC medicines.


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Can I just submit my Care Credit card statement along with my claim as supporting documentation?
No, we must have documentation from your provider, in addition to your credit card statement, in order to be able to consider your claim for reimbursement. The information from your provider must include the date of payment and payment amount.

Acceptable documentation from your provider includes:

  • A monthly statement from your provider including the monthly amount and date of payment
  • A paid receipt including the payment amount and date of payment
  • A copy of the contract for services from your provider

In addition, the expense must be for items or services that are considered eligible for reimbursement. Finance charges are not considered an eligible expense. Please refer to the FSAFEDS Eligible Expenses Juke Box for additional information.


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Can I submit claims during the Benefit Period for expenses that I incurred prior to my effective date?
No. You submit claims for expenses you incur on or after the first day of the Benefit Period during which you’re enrolled.


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How long after the end of the Benefit Period do I have to submit my receipts?
You have until April 30 to submit claims for expenses incurred during the previous Benefit Period. Your claim must either be postmarked or faxed by midnight Eastern Time on April 30. Be sure to keep a copy of your fax confirmation for your records. If a claim is denied for additional documentation, you have 30 days from the date of the denial to resubmit your claim with the appropriate documentation, even if that is after April 30. Your resubmitted claim must contain the exact same expenses that you submitted on the original claim and you only have one 30 day period in which to resubmit. You cannot substitute or add new expenses to the resubmitted claim. You will forfeit the funds if you do not resubmit the claim with the appropriate documentation within those 30 days.

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Is there a minimum reimbursement amount that I may claim?
Yes. FSAFEDS has a minimum reimbursement amount of $25.00. If your claim does not total $25.00, it will be processed and you will receive a reimbursement statement, but your payment will be pended until you submit another claim and reach the $25.00 minimum amount, or until the end of the quarter, whichever comes first.

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Can I be reimbursed for a claim that is more than the current amount in my FSA account?
The answer depends on the type of FSA you have:

  • For the Health Care and Limited Expense Health Care FSA, you can be reimbursed for claims that are more than the current amount in your account, as long as the total is not more than the amount of your annual election.
  • For the Dependent Care (Day Care) FSA, you can only be reimbursed up to the amount in your account at the time your claim is processed.


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I'm required to pay for my day care expenses upfront at the beginning of each month. Can I be reimbursed immediately since I paid it in full?
Unfortunately, no. IRS regulations stipulate that expenses can only be reimbursed after the service was actually provided.

Here are two ways you can submit:

  1. Submit expenses for a full month after that month has ended. Let’s say you incurred eligible day care expenses for January 1 – January 31. On February 1, you would submit your eligible expenses with the provider's signature on the claim form, or include receipts that include the dates of service, provider name and cost. The date that you sign and submit your claim form must be after the dates of service were incurred - in this example, February 1 or later.
  2. Submit the expense for a specific time period. Let's again say you will incur eligible day care expenses for January 1 - January 31. On Monday, January 8, you would submit your previous week's expenses (January 1 to January 5) with the provider's signature or documentation as outlined above. In order to be reimbursed for these expenses your invoice must show dates of services that have already been incurred. Also, you must sign, date and submit your claim form after the dates of service to validate services rendered - in this example, January 6 or later. You would continue to do this each week or on a schedule which works best for you.

You may want to consider having your day care (or elder care) provider sign the affidavit where indicated on the FSAFED Dependent Care Claim Form each time you submit a claim form. Then you do not have to submit receipts with your claim form. This simple step can save you valuable time.


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Can I submit claims for dependent care expenses that exceed the current amount in the account?
Yes, but unlike HCFSAs, you cannot be reimbursed for a DCFSA claim for an amount that is more than what you have contributed to the account at the date of the claim submission. For example, if you contribute $500 monthly you will only be able to get reimbursed $500 per month.

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Must I have the full allotted amount in my HCFSA and LEX HCFSA accounts before I can submit claims for expenses/services incurred?
No. Unlike DCFSA’s you will be fully reimbursed for eligible claims incurred prior to the end of the Benefit Period not to exceed the annual amount you elected. This is true regardless of how much you have contributed to the account, as long as you are an active participant in the program.

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Must I have the full allotted amount in my DCFSA account before I can submit claims for expenses incurred?
No, but unlike the HCFSA and LEX HCFSA, your DCFSA reimbursement is always the lesser of:

  1. the amount that you request for reimbursement
  2. the amount in your account at the time your claim is processed

If you file a claim that exceeds the amount, FSAFEDS will reimburse you up to the amount in your account at the date of submission, and pend the balance until you make another allotment into your DCFSA.


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Do I need to submit all my claims before the end of the year?
No. You have until midnight Eastern Time on April 30 following the end of the Benefit Period to submit health care and dependent care claims. All eligible expenses must be incurred by March 15 of the following year regardless of when they were paid for. For example, if you visit the dentist on February 28 but do not pay until March 18, the eligible expenses for this visit are reimbursable. An exception to the general rule is made for expenses for services that are sometimes pre-paid, such as initial payments for orthodontia expenses.

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I received my reimbursement in the form of a check and forgot about it. Can I still deposit the check into my bank account?
If you received a check from FSAFEDS and it is more than 180 days past the issue date, the check is considered void and cannot be reissued.

If you contact us and we are able to reissue the reimbursement before the check is voided, we will re-issue the funds to you using Electronic Funds Transfer (EFT). We will only re-issue a check to you if you are unable to accept an EFT. You will need to provide the following information when calling:

  • Social Security Number (SSN)
  • Name and address
  • Banking information for direct deposit (bank name, routing number and your account number)


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How should I submit my gym membership claims if I pay for the full amount upfront?
For a gym membership to even be considered for reimbursement, you must have:
  • Approved Letter of Medical Necessity (LMN) on file for a medical condition that requires exercise at a gym
  • Individual gym membership contract on file (multi-person contracts will not be considered)
  • Claim form accompanied by one of the following:
    • Either an itemized statement with date of service, type of service, dollar amount, and provider name/address OR,
    • Proof of payment from the gym (not a bank/credit card statement) with date of service, type of service, dollar amount, and provider name/address

If the LMN is approved, you have two options for submitting these types of claims. Please note that the IRS regulations stipulate that we cannot reimburse expenses that will be incurred in the future, even if the provider requires payment in advance for the entire period. This includes expenses such as gym memberships:

Here are your options:

  1. Submit expenses for a full month after that month has ended. Let’s say you are billed monthly for gym membership, and paid for January 1 – January 31. On February 1, you would submit a claim form for January only, and include the receipt for January’s membership that details the dates of service, provider name and cost.
  2. Submit the expense for a specific time period. Let's say you were asked to pay a fee upfront for a specified time period. For instance, in April you were asked to pay a $270 fee to cover gym membership for April through December. On May 1, you could submit a claim for $270 but we would pay a pro-rated amount of $30 ($270 divided by 9 months). On June 1, you could submit another claim and we would pay another $30. You could submit a claim each month thereafter with the appropriate documentation until you were reimbursed for the entire expense.

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Healthcare Reform Changes

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Can I still file claims for an OTC medicine or drug for reimbursement through my HCFSA?
Yes. Beginning January 1, 2011 you must have a prescription from your physician for an OTC drug or medicine (with the exception of insulin).

The OTC item must still follow the same IRS guidelines in order to be considered eligible for reimbursement:

  • The item must be a medicine or drug used "primarily for the treatment or alleviation of a physical defect or illness" and would not be used but for a particular medical condition.
  • The item must not be used for general health or cosmetic purposes.
  • You, your spouse, dependent or adult child through age 26 must use the item.
  • The expense must be for medical care during the current Benefit Period.


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What documentation do I need to submit for reimbursement of eligibile OTC drugs?
Please note: As of January 1, 2011 all OTC medicines/drugs (excluding insulin) will require a physician’s prescription in order to be considered for reimbursement.

You must submit a signed FSAFEDS Health Care Claim Form, along with:

  1. a copy of the prescription, and
  2. a copy of the product label or package, and
  3. a receipt with purchase price.

The prescription must be legible and include the following information:

  • The date
  • The name of the patient for whom the OTC item is prescribed
  • The name of the OTC item
  • The dosage requirement
  • The provider’s address and license

A Letter of Medical Necessity (LMN) will not be accepted in place of a physician’s prescription.

Your signature on the claim form certifies that you, your spouse, your dependent or adult child through age 26 will use the item purchased.

Please refer to the OTC Quick Reference Guide for more information on submitting claims for OTC medicines/drugs.

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Do I need to submit a prescription from my doctor each time I submit a claim for the same OTC drug?
Not necessarily. You will need to submit a new prescription once you have been reimbursed for the number of refills on the original prescription.

If your physician writes your prescription for 1 refill, you will be allowed a reimbursement for a one-time purchase.

If your physician writes your prescription for 10 refills, you will be allowed reimbursement for 10 purchases.

If your prescription does not indicate a specific number of refills, or that the OTC medicine should be taken “as needed” (P.R.N.), you must submit a new prescription each time you purchase the item. You cannot re-submit the same prescription.

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How does the new rule regarding the eligibility of an adult child through age 26 impact my HCFSA or LEX HCFSA?
Reimbursement of medical expenses incurred by your son, daughter, stepson, stepdaughter, adopted son or daughter, eligible foster son or daughter, or a child who is placed with the employee for legal adoption are eligible through the end of the calendar year in which they turn age 26. You may want to consider this change when deciding how much money to set aside before you re-enroll during the Federal Benefits Open Season.

Example:

    Rita Lennox is re-enrolling in FSAFEDS during the 2012 Open Season. Her daughter, Elizabeth, will turn 26 on July 1, 2012, so she increases the amount that she normally elects to contribute to her HCFSA, because she knows that she will be able to submit eligible expenses incurred by Elizabeth for reimbursement through December 31, 2012.


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I read the maximum annual amount I can contribute to a HCFSA is changing. What is the new maximum amount?
For the Benefit Period beginning January 1, 2013, all individuals participating in a health care flexible spending account will no longer be able to contribute up to $5,000 annually. The new maximum annual amount will be $2,500. This also applies to the Limited Expense FSA, however, the Dependent Care (Day Care) FSA maximum is not impacted - it is still $5,000.

This change will have no impact on your 2012 Health Care FSA. If you elected greater than $2,500 for the 2012 Benefit Period, you will still be reimbursed for eligible expenses up to the amount of your annual election.



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Paperless Reimbursement

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What is paperless reimbursement?
FSAFEDS offers paperless reimbursement for your HCFSA through a number of FEHB and FEDVIP plans. This means that when you or your provider file claims with your FEHB or FEDVIP plan, FSAFEDS will automatically reimburse your eligible out-of-pocket expenses based on the claim information it receives from your plan. There is little or no paperwork involved, and in many cases you will receive your reimbursement before your bill is due.

If you are not the FEHB and/or FEDVIP enrollee, you must provide information about the enrollee, including his or her Social Security Number.

You can enroll in paperless reimbursement (or cancel paperless reimbursement) for the current Benefit Period from January 1 until the beginning of Open Season by visiting www.FSAFEDS.com and logging into your account through My Account Summary and selecting Paperless Reimbursement from the left-hand menu.

Paperless reimbursement does not change your relationship or obligations to your health care provider, speed up the time it takes your provider to submit a claim to your FEHB and/or FEDVIP plan, or the time it takes for your plan to process your claim. You are expected to make payment for your out-of-pocket expenses as requested by your provider. Payment will be made directly from your FSAFEDS account to you via EFT. To learn more, visit the FSAFEDS Video Library and watch the "Paperless Reimbursement" video.

Important Note: For married employees where both spouses are enrolled in FSAFEDS but are covered under one FEHB self and family enrollment, all claims will be paid via paperless reimbursement (PR) from the plan enrollee’s (the person who pays the premium) FSA account. When you enroll in PR you can elect to participate in shared account processing with your spouse and once the enrollee’s balance has been exhausted, claims will be automatically forwarded and processed against the FSAFEDS account with a remaining balance. Otherwise, all claims need to be submitted manually against the other spouse’s FSA account. For married employees with two self-only enrollments, claims will be applied against the respective enrollee’s account only. If this processing and order of precedence does not meet your needs, please do not elect PR. If your spouse has secondary insurance, you probably should not enroll in PR.


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Which FEHB and FEDVIP plans participate in paperless reimbursement?
Currently there are several participating plans: Aetna, APWU Health Plan, Blue Cross/Blue Shield Service Benefit Plan (BCBS), Compass Rose Health Plan, Foreign Service Benefit Plan, Government Employees Hospital Association (GEHA), Humana, Mail Handlers, M.D. IPA, National Association of Letter Carriers (NALC), Special Agents Mutual Benefit Association (SAMBA), United Healthcare; as well as, Aetna Dental, GEHA Dental, United Concordia Dental, FEP Blue Vision and Vision Service Plan (FEDVIP). FSAFEDS continues to work with other FEHB and FEDVIP plans to implement this convenient feature.

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How do I sign up for paperless reimbursement?
You will be prompted to sign up when you enroll. Once you’ve enrolled in FSAFEDS, you can sign up or cancel your participation in paperless reimbursement for the current Benefit Period from January 1 until the beginning of Open Season by logging into My Account Summary and selecting Paperless Reimbursement from the left-hand menu. If you enroll after Open Season, your enrollment in paperless reimbursement is effective the next day. You will need to manually submit claims for any services provided for you or your family members covered under your FEHB plan and/or FEDVIP plan that are processed prior to your PR enrollment.

Paperless reimbursement is not available if you are enrolled in a LEX HCFSA.


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How does paperless reimbursement work?
Once your FEHB and/or FEDVIP plan processes your claims (medical, certain dental, vision and/or prescription claims), it will forward your out-of-pocket expense(s) electronically to FSAFEDS for automatic reimbursement to your Health Care Flexible Spending Account (HCFSA). By automatically forwarding these claims, you do not need to manually prepare and submit your claims with out-of-pocket costs from your plan to FSAFEDS.

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Do I have to do anything?
No action is required to file your FSAFEDS claim. Once your claim has been processed by your FEHB plan and/or FEDVIP plan, the claim will automatically forward to the FSAFEDS program. Note, however, that you must still file claims that are not forwarded to us by your plan. For additional information, see the Paperless Reimbursement Quick Reference Guides.

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Does paperless reimbursement speed up the FEHB or FEDVIP claims-paying process?
No, it does not. The timeline for your FEHB and/or FEDVIP plan to process your claim has not changed. Once your claim has been processed it will automatically be submitted to your FSAFEDS account. Your FEHB plan forwards your retail and mail-order pharmacy claims to FSAFEDS for processing from your Health Care Flexible Spending Account. The payment schedule for both the retail and mail-order pharmacy vendors is generally longer than what you may experience for your medical, dental and vision claims. This longer payment schedule means that your pharmacy claims will likely take longer to be reimbursed by FSAFEDS under paperless reimbursement.

For most medical, dental and vision expenses, it will take FSAFEDS 10-12 business days to process your claim from the date the expense was processed by your FEHB or FEDVIP plan. Retail and mail-order pharmacy claims may take up to 4-5 weeks to process, from the date the expense was incurred.


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Do I still pay my co-pays, deductibles, and other out-of-pocket expenses?
Yes. Paperless reimbursement does not change in any way your relationship and obligations to your health care providers. You are expected to make payment for your out-of-pocket expenses when requested by your provider. Under paperless reimbursement, FSAFEDS will reimburse you – not your provider. While in many cases you may be reimbursed before you receive a bill from your provider, you may not use paperless reimbursement as a reason for withholding a provider payment when you don’t.

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How often does FSAFEDS receive the file of processed claims from my FEHB plan?
FSAFEDS receives a file weekly for claims processed the prior week from each participant plan with the exception of Blue Cross/Blue Shield and Mail Handlers which send daily files.

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Are my retail and/or mail-order pharmacy claims covered under paperless reimbursement?
That depends on your plan.

 Plan Name  Services/Claims Covered  Services/Claims NOT Automatically Forwarded
 Aetna  Medical, Dental,  Pharmacy, Vision  
 APWU  Medical, Dental,  Pharmacy  Vision
 Blue Cross/Blue  Shield  Medical, Dental,  Pharmacy  Denied Pharmacy, Routine  Vision
 Compass Rose  Health Plan  Medical, Dental,  Pharmacy  Vision
 Foreign Service  Benefit Plan  Medical, Dental,  Pharmacy  Vision
 GEHA  Medical, Dental,  Pharmacy  Denied Pharmacy, Vision
 Humana  Medical, Pharmacy,  Vision  Dental
 Mail Handlers  Medical, Pharmacy,  Dental, Vision  Denied Pharmacy
 M.D. IPA  Medical, Pharmacy,  Dental, Vision  Primary Care Physician, Lab,  Radiology
 NALC  Medical, Pharmacy  Dental, Mental Health  Services, Vision
 SAMBA  Medical, Dental,  Pharmacy, Vision  Denied Pharmacy
 United  Healthcare  Medical, Pharmacy,  Dental, Vision  
 Aetna Dental (FEDVIP)  Dental  
 GEHA Dental (FEDVIP)  Dental  
 United Concordia  Dental (FEDVIP)  Dental  
 FEP Blue Vision (FEDVIP)  Vision  
 VSP (FEDVIP)  Vision  


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What if my FEHB or FEDVIP plan does not participate?
You may contact your plan and ask them to consider participating. You can also send us an email at FSAFEDS@adp.com, telling us the name of your plan. We will contact your plan to encourage them to consider participating in the program.

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Can I enroll now for paperless reimbursement?
You may enroll – or disenroll – for the current Benefit Period from January 1 until the beginning of Open Season. Simply go to www.FSAFEDS.com, click on My Account Summary and select Paperless Reimbursement in the left-hand menu.

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If I’m enrolled in one of the plans that participate in Paperless Reimbursement, am I automatically enrolled in PR?
No. You must make a positive election each year to participate. If your plan participates, and you want to enroll, click on the My Account Summary section at www.FSAFEDS.com and select Paperless Reimbursement from the left-hand menu.

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How will my FEHB or FEDVIP plan know that my dependents are covered under my health insurance?
You provide your plan with this information when you enroll, or when there has been a change in your enrollment.

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How does my FEHB and/or FEDVIP plan know to submit claims for my dependent to my FSA?
Your plan submits all claims - for all family members covered under your plan - to FSAFEDS via the enrollee’s SSN. If you are not the plan enrollee, you will need to provide that information during enrollment.

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What if I submit a claim directly to FSAFEDS?
We strongly encourage you not to manually submit the same expenses – after all, you signed up for paperless reimbursement so you wouldn’t have to fill out claim forms and submit receipts! However, if you do submit a claim that is automatically rolled over from your FEHB or FEDVIP plan, the claim would be denied as a duplicate.

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Will my plan submit expenses for over-the-counter medicines or products via paperless reimbursement?
No. Since non-prescription drugs are not eligible expenses under FEHB coverage, your plan will not process these claims, and there will be no EOB (Explanation of Benefits) information to send to FSAFEDS.

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Who do I contact if I have questions concerning paperless reimbursement or what's allowed under my HCFSA?
You can download a Paperless Reimbursement Quick Reference Guide, or contact an FSAFEDS Benefits Counselor, toll-free number at 1-877-FSAFEDS (372-3337), TTY: 1-800-952-0450, Monday through Friday, 9:00 A.M. to 9:00 P.M. Eastern Time.

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FSAFEDS Grace Period

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What is the FSAFEDS Grace Period?
The grace period is an additional 2 ½ months (January 1 through March 15) during which you can incur eligible expenses that can be reimbursed from your prior year balance. The grace period helps accountholders avoid forfeiting any of the funds they deposited in FSA accounts. It does not mean you can have prior year expenses paid from the current year. To learn more, visit the FSAFEDS Video Library and watch the "Grace Period" video.

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How will eligible grace period expenses be reimbursed?
First, you must have a remaining balance as of December 31. If you do not have a balance, the grace period will have no affect on your account.

If you have a balance as of December 31 and you incur eligible expenses during the grace period (January 1 thru March 15) simply submit those expenses in the same manner as you normally would by using the FSAFEDS Health Care claim form or FSAFEDS Dependent Care claim form.

Your claims will automatically be paid from the appropriate year. If you have a remaining balance in your prior year account and you submit eligible grace period claims (January 1 – March 15 following the Benefit Period) before the claims deadline of April 30th, the claims will be applied towards your prior year account until it is depleted.

After your prior year account is depleted, claims will process normally from the current year account. For example, if you happen to find claims with 2013 dates of service, after you have depleted your 2013 account balance, you can still submit those. The system will automatically adjust both of your accounts to ensure you do not lose money.

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Do I have to have an account next year to take advantage of the grace period?
No. Since the grace period is a part of the previous Benefit Period, you do not need to enroll again to take advantage. You must be employed by an agency that participates in FSAFEDS and be actively making allotments from your pay through December 31 in order to participate in the grace period. If you separate or retire from the government after December 31, you will still be eligible for the grace period after you leave.

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I enrolled in a general purpose HCFSA in last year but will enroll in an HSA this year. I know that means I can only enroll in the LEX HCFSA, but how does that work with the grace period?
Your grace period claims (those incurred between January 1 and March 15) can include expenses eligible under a general purpose HCFSA but those claims have to be paid from your previous year account. General purpose HCFSA eligible expenses (that are not dental or vision related) cannot be paid from your new LEX HCFSA.

In addition, if you had a general purpose HCFSA last year and you switch to an HDHP with an HSA for this year, your HSA funding will be postponed until April 1.

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How are grace period claims paid if I do not have a current year account?
If you do not have a current year account, grace period claims will be paid directly from your previous year account, up to the available balance. You cannot take advantage of the grace period if your employment status changes (you separate from Federal service or transfer to a Federal agency that is not covered by FSAFEDS) on or before December 31.

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What if I have an overpayment on my prior year account?
If you have an overpayment on your prior year account, we will apply your grace period expenses towards the overpayment to offset the amount.

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How will grace period expenses be handled if I have paperless reimbursement?
If you are enrolled in paperless reimbursement, grace period expenses will be paid from your current year account, up to the available balance.



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HIPAA and FSAFEDS

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What is HIPAA?
The Health Insurance Portability and Accountability Act, or HIPAA, addresses the security and privacy of health data. HIPAA helps ensure that all medical records, medical billing, and patient accounts meet certain consistent standards with regard to documentation, handling and privacy. HIPAA requires that all patients be able access their own medical records, correct errors, and be informed of how personal information is shared and used. This includes your health care FSA with FSAFEDS.


How can I authorize my spouse or other relative to have access and/or receive information on my account?
You must submit a form for Authorization for Use and Disclosure of Individually Identifiable Health Information or mail/fax a letter to FSAFEDS stating that your spouse or other relative has permission to speak, receive information and or act, on your behalf. Once received, your account will be noted.


How do I cancel an authorization when I no longer want to allow access to information on my account?
You must submit a form for Revoking An Authorization Or Restricting Uses And Disclosures Of Individually Identifiable Health Information or mail/fax a letter to FSAFEDS stating that you no longer want to allow individuals (either all or those you name specifically) permission to speak, receive information and or act, on your behalf. Once received, your account will be noted.


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The HEART Act - Qualified Reservist Distribution

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What is the Heroes Earnings Assistance and Relief Tax (HEART) Act?
The HEART Act (Public Law No. 110-245) contains tax benefits and incentives for individuals in military service. Section 114 of the HEART Act allows qualified reservists to receive a taxable distribution of their unused Health Care Flexible Spending Account (HCFSA) - also known as a qualified reservist distribution (QRD).

FSAFEDS adopted Section 114 of the HEART Act, effective January 1, 2009.


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What is a Qualified Reservist Distribution (QRD)?
A QRD is a taxable distribution of the unused balance of a qualified reservist's Health Care Flexible Spending Account (HCFSA) or Limited Expense Health Care Flexible Spending Account (LEX HCFSA).


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Who is eligible to request a QRD?
FSAFEDS participants are eligible to request a QRD if they are:

  • enrolled in an HCFSA or LEX HCFSA, and are
  • members of the Army National Guard, Air National Guard, Army Reserve, Navy Reserve, Marine Corps Reserve, Air Force Reserve, Coast Guard Reserve or Reserve Corps of the Public Health Service, and are
  • called to active duty for a period of 180 days or more, or for an indefinite period of time

Such eligible participants are referred to as Qualified Reservists.


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Why would I want a QRD?
You may want to request a QRD if you have a balance in your HCFSA or LEX HCFSA and think you might not be able to incur sufficient eligible expenses to deplete your account. Rather than forfeit those funds (remember the use-or-lose rule for FSA accounts), you can have your balance refunded to you. This is a new feature for Qualified Reservists only and FSAFEDS did not offer this alternative before now. The drawback is that the distribution will be taxable wages, and you also give up your ability to submit eligible expenses for the remainder of the Benefit Period.


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What if my current call to active duty is less than 180 days but I receive another call that extends my current period to 180 days or longer?
An order or call to active duty of less than 180 day's duration that is supplemented by one or more subsequent calls or orders to increase the total period of active duty to 180 days or more qualifies.


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When can I request a QRD?
If you meet requirements to request a QRD, you can request one during the period beginning with the date of the order or call to active duty and ending on the last day of the grace period for the Benefit Period during which the order or call to active duty occurs.

For example, if you are called to active duty on February 1, 2014, you could request a QRD from your 2013 HCFSA anytime from February 1, 2014 through March 15, 2014 (the last day of the 2013 Grace Period).


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What is the deadline for requesting a QRD?
The deadline is the last day of the Benefit Period during which the order or call to active duty occurs.

For any Benefit Period, the last day to submit a QRD is March 15 of the following year.

For the 2013 Benefit Period, the last day to submit a QRD for orders dated anytime in 2013 is March 15, 2014.


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How do I request a QRD?
Go to the Quick Links menu on the home page at www.FSAFEDS.com and click on "HEART Act - QRD". Simply complete and sign the form, then fax or mail the completed forms, along with a copy of your call to duty papers to FSAFEDS.


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How long will it take to process my QRD request?
QRD requests will be processed as soon as possible, usually within two weeks of receipt. However, in some circumstances, it may take up to 60 days to process your request. When we process your QRD it means that we have confirmed your refund amount and sent your refund to your payroll processor for action. It may take several pay periods from the time your payroll processor receives the refund to the time it shows up on your paycheck.


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How will my refund amount be determined?
A QRD refunds the balance of your FSAFEDS allotments that are in your HCFSA or LEX HCFSA as of the approval date of your request. We will calculate your balance by taking the current amount on deposit in your HCFSA or LEX HCFSA and subtracting the amount of claims reimbursed. We will confirm the balance in your account and notify you of the exact dollar amount.

For example, let's say you submitted all the eligible claims that you want reimbursement for and you submitted your request on June 15, 2013. Your HCFSA annual election is $2,500, your total claims paid to date is $900 and your total allotment amount is $1,300. Within a short period of time, FSAFEDS approves your QRD request and sends you an approval letter via email. The total amount of your QRD is $400. That would be your total allotments of $1,300 minus the $900 in reimbursements.


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How will I receive my refund?
You will receive it on your paycheck as taxable wages. After we process your QRD request, we send the refund to your payroll provider so they can include it in your salary. The refund amount will be subject to the same employment taxes and deductions as your other taxable salary.


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Will my QRD be considered taxable wages?
Yes.


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My QRD notification stated I would receive a $400 refund but I didn't receive an additional $400 on my paycheck - why not?
Because your QRD refund is subject to the same employment taxes and deductions as your other taxable wages - it will not appear on your paycheck as an additional net $400. Don't forget, FSAFEDS is a pre-tax benefit - the allotments that funded your HCFSA came from your pre-tax salary. You did not pay Federal tax or other employment tax deductions (e.g., Social Security withholdings) on those allotments. Now that you're getting your refund, those taxes have to be taken out.

Your refund gives you $400 more in salary that must be taxed before it can be paid to you. We don't know what your salary taxes are so we can't tell you what your "net" (after taxes and deductions have been taken) refund will be. One thing is for sure - the amount paid to you will always be less than the gross dollar amount of the QRD refund.


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What year will my QRD be reported on my W-2?
A QRD will be reported on your W-2 for the year in which you received the QRD.


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Will you tell me what my refund amount is before taxes are applied?
Yes. We will notify you via email regarding the approval or denial of your QRD. If approved, your total refund amount will be indicated.


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What happens to my HCFSA or LEX HCFSA after I request a QRD?
We will close your HCFSA or LEX HCFSA after we process your QRD.


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Can I submit eligible claims after receiving my QRD?
No. A QRD closes your HCFSA or LEX HCFSA account for the remainder of the Benefit Period. You cannot submit eligible claims after requesting a QRD.

We strongly recommend that you submit all of your eligible claims that you want reimbursed BEFORE you request a QRD.


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Will FSAFEDS allotments continue to come out of my pay after I request a QRD?
No. Allotments should stop. Depending on the timing of your request, the timing of your leave without pay status, and the timing of your payroll, there could be an additional allotment taken after your request. If this happens, the additional allotment will be refunded to you.


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Can I re-enroll in FSAFEDS after I receive my QRD?
Not for the same Benefit Period on which the QRD is based. You can enroll for the next Benefit Period during the corresponding annual Open Season provided you meet the normal eligibility requirements for participating in FSAFEDS.


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What are my options if my call to active duty occurs during the Grace Period and I'm enrolled in two Benefit Periods?
Let's say you have a previous year HCFSA and a current year HCFSA and your call to active duty is dated January 31 of the current year(the Grace Period runs from January 1 through March 15). You have three options available to you:

  1. You can request a QRD for just your previous year HCFSA - but you must do so by the last day of the Benefit Period. In this example, the last day that you can submit a request is March 15 of the current year.
  2. You can request a QRD for just your current year HCFSA. In this example, you would have until March 15 of next year (the Grace Period runs from January 1 through March 15 of next year) to submit your request.
  3. You can request a QRD for BOTH previous year and current year HCFSAs - either at the same time or different times. Just remember that you must submit your request before the end of the Benefit Period (that would be March 15 of the current year for your previous year account, or March 15 of the next year for your current year account) in which you are requesting a QRD.

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What if I'm enrolled in two Benefit Periods and I submit my QRD request but neglect to tell you from which Benefit Period that I want my QRD?
First, we will try and contact you to find out what you want us to do. If we can't reach you then we will process the QRD from the Benefit Period that contains the grace period.


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Can I have more than one QRD in a Benefit Period?
No. You can only have one QRD per Benefit Period.


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I was called to active duty back in 2008. Can I request a QRD?
Maybe. If you were ordered or called to active duty before June 18, 2008 and the period of active duty continued after June 18, 2008 - you are eligible provided that you were called to active duty for a period of 180 days or more, or for an indefinite period of time.


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I'm not being called to active duty, but I would love to receive a taxable distribution of my HCFSA. Can I get one?
No. The Internal Revenue Service only allows this taxable distribution for people who meet the requirements as a Qualified Reservist.


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