FSA and HRA FAQs
1. How do I use money in my spending account(s)?
There are two ways to access money in your accounts:
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.
Pay for eligible expenses out of pocket and then submit a claim form to be reimbursed from your spending account.
Refer to the Forms and Documents page to find the "Claim Form" for the Flexible Spending Account or the Health Reimbursement Account. (Forms will change in January 2009)
NOTE: The same claim form is used for the Flexible Spending Account and Health Reimbursement Account.
2. What is the “health care card”?
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.
Read an excerpt of Internal Revenue Bulletin 2006-30 for more information on debit card transactions and why you have to submit receipts if asked.
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.
3. How do I use the health care 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).
4. Where can I use the health care card, that is, what merchants are “approved”?
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 IIASDoctor’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.
5. If I have an FSA and receive the HRA, which account is accessed first to pay a claim?
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.
6. If I use the health care card, does the money come from my FSA or my 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.
7. What is the IRS grace period for the FSA?
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.
8. What is the deadline to submit claims for 2009 expenses?
Flexible Spending Accounts (formerly Personal Spending Account):
April 15, 2010
Health Reimbursement Account (formerly Flexible Reimbursement Account)
February 28, 2010
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
9. What happens if I swipe my health care card for an amount greater than the available balance?
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.
10. What happens if I buy something with the health care card that is not an eligible purchase?
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.
11. Why do I need to save my receipts for health care card transactions?
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.
Read an excerpt of Internal Revenue Bulletin 2006-30 for more information on debit card transactions and why you have to submit receipts if asked.
12. When does my HRA balance from the previous plan year rollover?
Unlike the FSA, HRA balances roll from year to year.
The HRA rollover can't happen until the previous year's books are closed, which takes a few weeks after the last day to submit HRA receipts (February 28). Once those claims are paid, PayFlex can process the rollover (mid-March or April).
13.What is Vanderbilt’s plan year?
The plan year is from January 1 to December 31.
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