FSA and HRA FAQs
Last Modified: 2016-08-17
1. How do I enroll in a Flexible Spending Account (FSA)?
For new employees. Enroll within three months of your hire date by going to My VU Benefits. 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 with 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 for your FSA will be deducted evenly from each paycheck for that year, beginning with the first paycheck after three months of employment.
For current employees. Your FSA enrollment will not roll over to the next calendar year. If you would like to continue an FSA for the next calendar year, you will need to make FSA elections during Open Enrollment. 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 with the first paycheck after eligibility.
2. What is the Health Reimbursement Account (HRA)?
The Health Reimbursement Account (HRA), formerly called the "Flexible Reimbursement Account," is a health care reimbursement account for faculty and staff whose employment began on or before December 31, 2004.
3. How do I access the money in my spending account(s)?
There are two ways to access money in your accounts:
- For the Health Care FSA and Dependent Day 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 Care FSA and HRA, you may also use the Benefit Express MasterCard for eligible medical expenses.
4. What is the health care card?
The health care card issued by Benefit Express 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 Benefit Express to verify that purchases made with the card were for 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.
5. 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).
6. Where can I use the health care card; that is, which 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 Benefit Express 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.
7. 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.
8. 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.
9. What is the IRS grace period for the FSA?
The Internal Revenue Service allows FSA participants to be reimbursed for health care and dependent day 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. You have three and a half months after the plan year ends to submit claims for reimbursement. The deadline is April 15 of each year to request reimbursement for funds sheltered in the previous year for FSAs.
10. What is the deadline to submit claims for 2016 expenses?
- Flexible Spending Accounts: April 15, 2017
- Health Reimbursement Account (for employees whose employment began on or before December 31, 2004): April 15, 2017
11. 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.
12. 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
- 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. Benefit Express reviews the information they receive 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 Benefit Express 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
- Send a payment to repay your account for the amount
13. 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 Benefit Express to show proof that you have used those dollars appropriately, you must have receipts available to do so.
14. When does my HRA balance from the previous plan year rollover?
Unlike the FSA, HRA balances roll from year to year. HRA funds remaining at the end of a calendar year should roll forward in mid-January.
15. What is Vanderbilt's plan year?
The plan year is from January 1 to December 31.
16. When is the deadline to use my 2016 FSA?
Your 2016 FSA funds will be available for use until March 15, 2017. You must submit your claims by April 15, 2017.