Your health care benefits are provided by your employer to help you and your family stay well. And to get the most from your benefits, it’s important to understand how they work. If you’ve ever had questions about spending accounts, we have answers!
For many, open enrollment for 2022 will be coming up soon. Now is a good time to brush up on your knowledge of spending accounts if you’ll be offered one by your employer.
Helping you cover health care expenses
Depending on expenses you’re expecting during the plan year, such as a surgery or the birth of a child, you may have concerns about how you’ll be able to afford your care. To help you cover costs along the way, your employer may allow you to elect a spending account, which can make it easier to pay your health care bills. You can use the money in your spending account to pay for eligible health care expenses, products and your deductible, depending on which type of spending account you have available to you.
Health Reimbursement Arrangements
The first type of spending account is called a Health Reimbursement Arrangement, or HRA. Your HRA is funded by your employer, and they decide what expenses you can use it for. As with anything else, it’s important to plan carefully with a spending account. HRAs are not “portable,” meaning if you leave your company during the plan year, you can’t take your HRA money with you.
Spending accounts come with different features. If you choose an HRA, your plan may also have extra features associated, that will help you along the way. They may include:
- Rollover. If you don’t use the money in your HRA during your plan year, it may roll over into the next year. This means you’ll have extra money saved in case you need it.
- Debit card. Your employer may also issue you an HRA debit card. Eligible vendors or providers simply swipe your debit card and receive payment directly from your HRA at the time of your transaction. If you have this feature, it’s important to save all of the supporting documentation from your service in case you need to submit documentation to substantiate the charge. There are times when the transaction can’t be verified, and you will be asked to submit the supporting documentation. The documents must include your name (or the eligible patient’s name), the name of your doctor or vendor, date of service, service incurred, and total patient responsibility. Please note, if you submit information for non-qualified health care expenses, your transaction will be denied.
- Automatic reimbursement. This feature means while you’re an active employee, eligible health care expenses can be automatically reimbursed through your HRA plan up to the annual amount provided by your employer.
It’s important to check with your employer and in your benefits booklet to see if your Health Reimbursement Arrangement has any of these features, and for more information about what you’re able to cover with your HRA. This way, you can be sure it’s the right choice for you and your family.
Flexible Spending Accounts
Another type of spending account is a Flexible Spending Account, or FSA. Depending on the types of FSA’s your employer offers, you can pay for various expenses.
Health Flexible Spending Account: Full Purpose vs. Limited Purpose
The types of FSAs differ based on what health care expenses you can use your FSA funds to cover. You can use a full purpose FSA for any eligible health expenses, as listed in your benefit guide. However, a limited purpose FSA is a little different. You can only use a limited FSA for dental, vision and other specified health expenses. It’s important to know if you or your employer are contributing to an HSA, you can’t sign up for a full purpose FSA, but you can elect a limited purpose FSA, if offered.
Flexible Spending – Dependent Care Account
Another type of FSA is the Dependent Care Account or DCA, you can also set aside pre-tax dollars for daycare type expenses for eligible children and adults. Expenses are eligible if they’re for the care of your dependent child under age 13, or an older dependent who is unable to care for themselves and lives with you for more than half the year. Determination of eligible expenses are in accordance with IRS codes. For more information, you should check your plan document or visit www.irs.gov.
About your FSA
An FSA is a convenient, easy and tax-advantaged way for you to set aside a portion of your income, pre-tax, to help you pay for your health-related expenses. You decide how much to set aside each year within the IRS regulated maximums. If you overestimate and there is money left in your Health FSA at the end of the year, you’ll unfortunately lose this money. The IRS’ rule is use it, or lose it. There are a couple plan features that may balance some of the potential loss, you may have extra time to spend OR possibly carryover funds to a new plan year, if your employer offers a grace period extension or the carryover provision.
Health Savings Accounts
Another spending account option is a Health Savings Account, or HSA. Your HSA is funded by you, your employer, or both.
About your HSA
An HSA is an account you contribute pre-tax dollars to in order to help you pay for your out-of-pocket medical expenses, such as your deductible or coinsurance. This means you pay fewer taxes on what you earn.
Your deductible is the annual set amount you need to reach each calendar year before you start paying copays or coinsurance for services by your plan. Coinsurance begins after you pay your annual deductible and any up-front copays. This means your plan pays a percentage of your provider’s charges. The remaining percentage is your responsibility.
The good news is, if you leave your job, your HSA money goes with you. This can help you save long term.
Wondering what you can cover with your HSA? You can find more information online at www.irs.gov.
Want to learn more?
Our Meritain Health YouTube channel features videos on various health care topics to help you understand your benefits and plan, including more about spending accounts and what you need to know.
If you have a spending account with your Meritain Health® benefits plan and have any questions, we’re here to help. Just call our Meritain Health FSA Customer Service team at 1.800.566.9305, option 5.