FSA and HRA FAQs
- How do I enroll in a Flexible Spending Account?
- How do I access the money in my spending account(s)?
- What is the “health care card”?
- How do I use the health care card?
- Where can I use the health care card, that is, what merchants are "approved"?
- If I have an FSA and receive the HRA benefit, where does the money get deducted from first?
- If I use the health care card, does the money come from my FSA or my HRA?
- What is the IRS grace period for the FSA?
- When is the deadline to submit claims?
- What happens if I swipe the health care card for an amount greater than the available balance?
- What happens if I buy something with the health care card that is not an eligible purchase?
- Why do I need to save my receipts for health care card transactions?
- I know I had an HRA balance from last year. Where is that money?
- What is Vanderbilt's plan year?
- For New Employees. If you want to enroll in an FSA, you must enroll within three months of your hire date. Then your FSA start date will be the first day of the month after three months of eligible employment. You can file and be reimbursed for claims for eligible services received on or after your FSA start date. Payroll deductions begin upon the first paycheck after eligibility. For example, if you were hired on July 10, your payroll deductions would start with your November paycheck. The amount you elect will be deducted evenly from each paycheck for that year, beginning with the first paycheck after three months of employment.
- For Current Employees. To continue an FSA each calendar year, you must request FSA enrollment during the benefits Open Enrollment period each fall. The FSA start date will be January 1 of the next calendar year. You can file and be reimbursed for claims for eligible services received on or after your FSA start date. Payroll deductions begin upon the first paycheck after eligibility.
There are two ways to access money in your accounts:
- For the Health FSA and Dependent Care FSA, you pay for eligible expenses out of pocket and then submit a claim form to be reimbursed from your spending account. Find the claim form on Tools and Forms under Flexible Spending Accounts and Health Reimbursement Account. NOTE: The same claim form is used for the Flexible Spending Account and Health Reimbursement Account.
- For the Health FSA, you may also use the PayFlex MasterCard for eligible medical expenses. You must save all your receipts when you use the card and be prepared to send copies of those receipts to Payflex.Also, please note these new PayFlex card requirements:
- As of April 1, 2013, you will need to set up a Personal Identification Number (PIN) for your PayFlex card. To set up your PIN, call PayFlex toll-free at 1.888.999.0121. You will reach an automated call center and will need to provide your card number, zip code and the 3-digit number on the back of the card. Note: if you call before April 1, you will hear a message telling you to call back on or after April 1.
- As of May 1, 2013, if you get a new or replacement PayFlex card, you will need to activate the card before using it. Note that this only applies to new or replacement cards. To activate a new or replacement card, call PayFlex toll-free at 1.877.261.9951.
The health care card issued by PayFlex is a convenient way to pay for eligible, unreimbursed medical expenses. The money in your FSA and/or HRA is accessed when you swipe your card at the point of service, for instance at a doctor’s office or pharmacy. The health care card is not a credit card, although it carries the MasterCard logo for convenience.
YOU MUST KEEP ALL RECEIPTS WHEN YOU USE THE CARD. The IRS requires PayFlex to verify that purchases made with the card were for only eligible medical expenses. If the merchant does not transmit sufficient information at the time of purchase, you will be required to mail or fax receipts.
IF YOU HAVE UNVERIFIED EXPENSES FOR MORE THAN 60 DAYS, your card will be deactivated. At that point, you must provide receipts to verify those purchases in order for your card to be reactivated. It takes 48 hours to reactivate your card.
You can use your health care card to pay for eligible expenses almost anywhere you purchase health care services or products — providing the merchant is approved. Simply swipe the card at the register (select "Credit" if asked) and funds are deducted automatically from your FSA or HRA, as applicable (see answer to Question 7 for more details about payout from FSA vs. HRA).
The term "merchant" is used to describe a provider or retail store that accepts payment through the card network, which authorizes all health care card payments. Each merchant who accepts card payments is assigned to a merchant category based on their line of business. The Internal Revenue Service controls where the health care card can be used by approving merchant categories that represent merchants who are very likely to sell or provide eligible health care products and services. Card payments at all other merchant categories are prohibited and automatically declined through the card network. When the health care card is used at any merchant who is assigned to an approved merchant category, the card payment is instantly authorized by the card network in the transaction amount (up to the account balance). Note that the card transaction is not approved as an eligible health care expense; that comes later.
IRS Restrictions on Health Care Card Use
IRS guidelines require certain types of merchants to be certified to accept FSA debit cards, including our PayFlex health care card. The certification process is called Inventory Information Approval System (IIAS).
Businesses That Shouldn’t Be Affected by IIAS
Doctor’s offices, dentists, and vision care providers are not required by the IRS to be IIAS certified. Your card should work at these businesses.
Businesses That Are Affected by IIAS
Grocery, department, discount, online and warehouse stores -- and beginning January 1, 2009, all pharmacies must be IIAS certified. If these merchants are not IIAS certified, the IRS will not allow them to accept the Health Care Card for payment.
What About Pharmacies?
Pharmacies will no longer be able to accept the health care card if they are not IIAS certified.
Funds in the FSA are accessed first, as those funds will not rollover into the following plan year. Once the FSA balance is zero, claims would then be paid out of the HRA.
As in #6 above, funds are paid out of the FSA first and then the HRA. If the account balance of your FSA reaches zero, claims (or card transactions) would be paid out of your HRA.
The Internal Revenue Service allows FSA participants to be reimbursed for health care and dependent care expenses incurred during a two-and-a-half-month grace period after the end of the plan year. In layman’s terms, this means that expenses incurred from January 1 through March 15, can be claimed against the previous year's FSA. Claims must be made by April 15, 2013.
- Flexible Spending Accounts (formerly Personal Spending Account): April 15, 2013
- Health Reimbursement Account (formerly Flexible Reimbursement Account): February 28, 2013
NOTE: If you terminate employment during the year, your deadlines to submit claims are:
- Flexible Spending Account: December 31 of the plan year in which you terminate employment
- Health Reimbursement Account: 30 days from termination date
If the account balance is not sufficient to cover the transaction amount, the transaction will be declined through the card network at the point of purchase. You will need to use another form of payment and then request reimbursement by submitting claim form for the amount that is available in your account.
The criteria for approving the transaction for payment are:
- the card is activated,
- the account has a balance sufficient to cover the transaction amount, and
- the merchant is likely to sell or provide eligible health care products and services.
If a transaction is approved based on these criteria, money is transferred from your FSA (or HRA) to the merchant.
PayFlex reviews the information it receives from the point-of-sale for each card transaction. If the transaction cannot be verified after the review process, the unverified transaction will be listed on a letter sent to you from PayFlex each quarter. You must either:
- provide a detailed receipt showing a) the name of the patient, b) date of service, and c) description of services provided,
- submit a substitute receipt for another eligible unreimbursed health expense, or
- Send a payment to repay your account for the amount.
FSAs and the Vanderbilt-funded HRA are regulated by the Internal Revenue Service. Money in those accounts is not taxed as income and therefore can only be used for eligible expenses (medical or dependent care). If you are contacted by the IRS or PayFlex, to show proof that you have used those dollars appropriately, you must have receipts available to do so.
Unlike the FSA, HRA balances roll from year to year. HRA funds remaining at the end of a calendar year should roll forward in early January.
The plan year is from January 1 to December 31.