FLEXIBLE SPENDING ACCOUNT EMPLOYEE GUIDE
BENEFITS OF AN FSA
Medical and dependent care costs can pile up. You already know that. But did you know there’s an opportunity to save on those expenses by taking advantage of pre-tax benefits? A Flexible Spending Account (FSA) lets you budget and save for qualified medical and dependent care expenses. Your FSA funds are put aside before taxes, which means more money in your pockets. One of the best perks of an FSA is that all of your funds are available to use at the start of the plan year. That means if you have a big medical expense at the start of the plan year, you can tap into your FSA funds immediately to help cover the cost (does not apply to Dependent Care FSA).
FSAs OFFER MANY BENEFITS.
Pre-tax savings. The dollars you contribute to an FSA are added pre-tax. For example, if you contribute $2,500 to an FSA during a plan year and pay a tax rate of 30%, you’d save $750. Funds available right away. All of your plan’s funds are available on the first day (does not apply to Dependent Care FSA). Options. There are a few different types of FSAs to choose from. The options available to you depend on the type of health plan you’re enrolled in.
HOW IT WORKS
MEDICAL FSA Pair a traditional health plan with a Medical FSA, which covers eligible medical, dental and vision expenses. The medical expenses must primarily alleviate or prevent a physical or mental defect or illness. Note: If you’re enrolled in a Health Savings Account (HSA), you’re not eligible for a Medical FSA. Examples of eligible expenses include doctor visits, physical therapy, speech therapy, surgeries, hearing aids, ambulance costs, acupuncture and all Limited FSA eligible expenses. LIMITED FSA If you’re participating in a High-Deductible Health Plan and an HSA, you’re eligible to enroll in a Limited FSA alongside your HSA to maximize savings. These funds can be used for qualifying dental and vision expenses. Examples of eligible expenses include dental exams, vision exams, prescription glasses, laser-eye surgeries, contact lenses, orthodontics and dentures.
DEPENDENT CARE FSA A Dependent Care FSA allows you to put money aside for dependent care for children up to age 13, a disabled dependent of any age or a disabled spouse. To be eligible for a Dependent Care FSA, you and your spouse (if applicable) must work, be looking for work or be full-time students. You can be enrolled in both an HSA and Dependent Care FSA. Dependent Care FSA expenses can be reimbursed up to the current balance in the account.
Examples of eligible expenses include preschool and after-school care, daycare providers and summer day camps.
THE SAVINGS POWER OF AN FSA Let’s look at an example in the Smith family. Both parents work outside the home. One child attends school; the other goes to a home daycare. Together, the parents make $7,500 per month and claim four exemptions on their income taxes. Look at their monthly take-home pay when they take advantage of a Medical FSA and a Dependent Care FSA!
WITH AN FSA/DEPENDENT CARE FSA COMBINED GROSS MONTHLY SALARY.............................$7,500 MEDICAL FSA CONTRIBUTION...........................................$208 DCA CONTRIBUTION. ..........................................................$416 TAXABLE INCOME................................................................$6,876 TAXES....................................................................................$2.407 NET PAY................................................................................$4,469 POST-TAX MEDICAL EXPENSES.........................................$0 POST-TAX DEPENDENT CARE EXPENSES.........................$0 MONTHLY INCOME..............................................................$4,469
WITHOUT AN FSA/DEPENDENT CARE FSA COMBINED GROSS MONTHLY SALARY......................... $7,500 MEDICAL FSA CONTRIBUTION....................................... $0 DCA CONTRIBUTION. ...................................................... $0 TAXABLE INCOME............................................................ $7,500 TAXES................................................................................ $2,625 NET PAY............................................................................ $4,875 POST-TAX MEDICAL EXPENSES..................................... $208 POST-TAX DEPENDENT CARE EXPENSES..................... $416 MONTHLY INCOME.......................................................... $4,251
WITH THESE FSAs, THE SMITHS SAVE...
GETTING STARTED WITH AN FSA
PLANNING Use It or Lose It
WHAT TO CONSIDER WHEN DETERMINING YOUR FSA ELECTION Big-ticket expenses Do you have a major surgery expected for the upcoming plan year? Have children who are keeping you busy with trips to the doctor? These types of expenses will almost certainly lead you to spend the maximum amount allowed to be put into an FSA, which means big pre-tax savings for you. Regular expenses Items such as dental exams or eye appointments are easy-to- anticipate expenses. Make sure to factor these in when determining your election amount.
The most important step to have success with your FSA is planning ahead. Because the IRS has a “Use or Lose” rule in place for FSAs, funds not spent by the end of a plan year are at risk of being forfeited. Note: Your employer offers a $500 carryover to reduce risk on Medical FSAs and Limited FSAs. To plan ahead with your FSA, you’ll first want to estimate how much you think you’ll spend on qualified expenses throughout the year. Need help determining the amount that’s right for you? Use our FSA Calculator at www.DiscoveryBenefits.com/fsacalculator.
MAKING PLAN CHANGES MID-YEAR There are circumstances — called “qualifying events” — that allow you to make changes to your FSA election in the middle of a plan year. These include: • Marital status changes
• Number of tax dependent changes (e.g. birth, death, adoption) • Employment changes (e.g. leave of absence or retirement) • Dependent doesn’t meet eligibility requirements due to change in age or student status • Change in residence
GO MOBILE WITH YOUR FSA To make managing your FSA as simple as possible, be sure to download the Discovery Benefits mobile app, available on Apple or Android devices.
WITH OUR MOBILE APP, YOU CAN:
GET INSTANT NOTIFICATIONS ON THE STATUS OF YOUR CLAIMS AND UPLOAD DOCUMENTATION IN SECONDS USING YOUR PHONE’S CAMERA.
CHECK YOUR BALANCE AND VIEW ACCOUNT ACTIVITY.
LOG IN WITH A FOUR-DIGIT PIN, REPORT A CARD AS LOST OR STOLEN TO KEEP YOUR ACCOUNT SECURE.
RESET LOGIN CREDENTIALS.
DOWNLOAD THE APP FOR FREE ON APPLE AND ANDROID DEVICES
ELIGIBLE EXPENSES Common eligible expenses for a Medical FSA are prescription drugs, hearing aids, orthopedic goods, doctor visits and dentist visits, while a Limited FSA is limited to dental and vision expenses. A Dependent Care FSA covers expenses such as work-related daycare and elderly care costs. To view our searchable list of eligible expenses, go to www.DiscoveryBenefits.com/ eligibleexpenses. FSA STORE Need to spend down your balance but not sure what to use your funds on? Discover thousands of eligible FSA expenses at www.DiscoveryBenefits. com/fsastore and make purchases for FSA-eligible items using your pre-tax funds.
THE BENEFITS DEBIT CARD With the Discovery Benefits debit card, using your FSA dollars has never been easier. It streamlines the process of managing multiple benefits plans with us. One card — that’s all you need for all of your plans. You’ll receive your one card when you enroll, and you can request additional cards for your spouse and dependents 18 years or older — for free — through your online portal. Handy features Payments are automatically withdrawn, minimizing out-of-pocket costs. The card’s technology ensures that the correct balance is pulled when you swipe it.
Actual card design may vary.
WAYS TO SPEND Swipe your benefits debit card to instantly pay for eligible expenses with funds from your benefits accounts. Where you swipe the card will determine whether any steps are needed after that. In addition to using your benefits debit card to pay for services at your healthcare provider’s office, you can also use it at the following types of merchants: IIAS Many merchants provide IRS-required information for documentation right at the point of sale through an Inventory Information Approval System (IIAS). An IIAS merchant auto-substantiates the claim, so you won’t need to provide additional documentation on qualifying expenses. 90% Merchants Our debit card also works at pharmacies or drug stores that meet the IRS’ 90 percent rule. At least 90 percent of the gross sales at these merchants come from eligible medical expenses.
OTHER WAYS TO USE YOUR FSA INCLUDE: • Paying up front for FSA-eligible products and services and requesting reimbursement by filing a claim and providing documentation, either through the mobile app or consumer portal. If you’ve signed up for direct deposit, you’ll get reimbursed faster, as the money will get deposited straight into your bank account. You may also receive a check reimbursement. • Enrolling in Recurring Dependent Care, which means you only need to submit one reimbursement form per year for each daycare provider used.
SUBSTANTIATE YOUR CLAIMS To show that expenses incurred are eligible, the IRS requires purchases made with an FSA be substantiated. This process verifies that purchases made with FSA funds meet regulatory requirements. A good rule of thumb when submitting documentation is to provide your Explanation of Benefits (EOB) document from your insurance provider, as this typically includes all the required information to substantiate an expense.
DOCUMENTATION REQUIREMENTS FOR MEDICAL OR LIMITED FSA EXPENSES • Date service was received or purchase was made • Description of service or item purchased • Dollar amount • Provider or store name (in some cases, a Medical Necessity Form, prescription or physician letter may be required).
DOCUMENTATION REQUIREMENTS FOR DEPENDENT CARE FSA EXPENSES • Date(s) of service • Dependent’s name • Description of service(s) • Dollar amount • Provider’s name, address and tax ID or social security number
TIP To speed up debit card substantiation, use Claims Sync through your consumer portal. The tool syncs information from your insurance carriers directly into your account dashboard and will automatically search for expenses that match recent debit card transactions.
WAYS TO SUBMIT
You can submit documentation within minutes using the Discovery Benefits mobile app. Our app is the quickest and easiest method for filing claims and submitting documentation for your FSA purchases because it lets you use your phone’s camera to take pictures of documentation and upload it on the spot.
You can also submit documentation through your consumer portal or via fax or mail. To submit documentation through your portal, log in and follow the prompts you see in the “Receipt(s) Needed” menu under the Home tab. If further documentation is needed beyond what you provide, you’ll receive an email if an email address is on file.
ELIGIBLE EXPENSE LIST www.DiscoveryBenefits.com/eligibleexpenses
FSA 101 VIDEO www.DiscoveryBenefits.com/fsa101
FSA CALCULATOR www.DiscoveryBenefits.com/fsacalculator
MOBILE APP VIDEO www.DiscoveryBenefits.com/mobileappvideo
ONLINE CHAT www.DiscoveryBenefits.com
Your Privacy: HIPAA (Health Insurance Portability and Accountability Act) provides rights and protections for participants and beneficiaries in group health plans. Due to these regulations, Discovery Benefits can’t disclose personal health information to any unauthorized representatives. To authorize an individual or entity to discuss your account details, complete the Authorized Representative Form. Once the form is approved, any authorized representatives can discuss account details until their authorization is removed.
BENEFITS DEBIT CARD EMPLOYEE HANDOUT
BENEFITS SPENDING MADE EASY
ONE DEBIT CARD FOR ALL OF YOUR BENEFITS
ABILITY TO REQUEST ADDITIONAL CARDS FOR A SPOUSE OR ELIGIBLE DEPENDENTS FOR FREE
NO FEES FOR LOST OR STOLEN CARDS
The Benefits Debit Card The Discovery Benefits debit card is the fastest and most convenient way to pay for eligible expenses. The debit card makes it easy to access funds in your pre-tax benefits accounts, reducing your out-of-pocket costs. At many merchants, it also simplifies the way expenses are verified for eligibility. How It Works Swipe your benefits debit card to instantly pay for eligible expenses with funds from your benefits accounts. Where you swipe the card will determine whether any steps are needed after that. In addition to using your benefits debit card to pay for services at your healthcare provider’s office, you can also use it at the following types of merchants: IIAS Many merchants provide IRS-required information for documentation right at the point of sale through an Inventory Information Approval System (IIAS). An IIAS merchant auto-substantiates the claim, so you won’t need to provide additional documentation on qualifying expenses. 90% Merchants Our debit card also works at pharmacies or drug stores that meet the IRS’ 90 percent rule. At least 90 percent of the gross sales at these merchants come from eligible medical expenses. For a full list of IIAS and 90 percent rule merchants, visit www.DiscoveryBenefits.com.
Submitting Documentation for Debit Card Transactions
But, when in doubt, the IRS has identified the criteria for what needs to be included when submitting documentation for eligible expenses: • Name of the provider/merchant • Date(s) of service • Type(s) of service • Amount (after insurance, if applicable) • Name of person who received the services (if the account covers dependents) How to Submit You can submit documentation in seconds using the Discovery Benefits mobile app. Our app is the quickest and easiest way to submit documentation because it lets you use your phone’s camera to take pictures of your documents and upload them on the spot.
Occasionally, documentation will be needed to verify the eligibility of an expense paid for on your debit card. Even places like doctors’ and dentists’ offices may require you to submit documentation because some expenses available at these facilities may not be IRS-eligible (e.g. cosmetic procedures, teeth whitening). When Documentation Isn’t Needed • When used at an IIAS merchant • When used for recurring expenses that match the provider and dollar amount for previously substantiated claims • When used for co-payments tied to the account holder’s health plan (Note: These amounts need to be communicated to Discovery Benefits by your employer) • When used to access HSA funds If none of the above criteria apply, you’ll be notified via email or mail that documentation is needed. What to Submit When submitting documentation for a debit card transaction, an Explanation of Benefits (EOB) from your insurance company will typically be your best bet, as it contains all the information you need to substantiate a claim.
DOWNLOAD THE APP FOR FREE ON APPLE AND ANDROID DEVICES
You can also submit documentation through your online consumer portal or via fax or mail. No matter how you choose to submit documentation, we’ll process your claim in two business days.
Watch our Easy Substantiation video at www.DiscoveryBenefits.com/easysubstantiation to learn more about submitting documentation for debit card transactions.
MORE TIME TO SPEND FSA DOLLARS
What is a carryover in reference to my Flexible Spending Account (FSA)? A carryover allows you to access up to $500 of your remaining balance from the prior plan year for claims incurred during your next plan year. When does the carryover begin? The carryover amount becomes available to an FSA participant at the end of the run-out period (the last date participants can submit documentation or file a claim) from the previous plan year. Can I carry over more than $500 to my next plan year? No, the maximum carryover allowed is $500. Any remaining balance that remains in a Medical FSA or Limited FSA after the carryover has been made will be forfeited. If I have the Discovery Benefits debit card, how will my debit card work with my FSA carryover? After the run-out period ends, the debit card will continue to work as normal. Funds will be used that are carried over in addition to your election amount in your next plan year. Does the carryover apply to a Dependent Care FSA? No, the carryover is only available for Medical FSAs and Limited FSAs.
Will the carryover amount count toward my maximum annual election? The carryover does not count against the current salary reduction limit. You are able to carry over $500 (or, if your remaining balance is less than this amount, a number equal to your unused funds) while still electing the full maximum annual election. How do I see if the carryover has been added to my account? Once the run-out period has ended, you can view this information under the Accounts tab in your Consumer Portal. On the right side, select the downward arrow for the plan year and click any of the amounts to expand the selection and view election details. The Eligible Amount will be the annual election amount plus the carryover from the previous year. For any other questions about your FSA carryover, please call, email or chat online with our Participant Services team. Hours of Operation 6 a.m. to 9 p.m. CST (M-F) Toll-Free Phone Number 866-451-3399 Toll-Free Fax Number 866-451-3245 Email Address email@example.com
Guide to Limited FSAs
PAY PRE-TAX. SAVE MONEY.
A Limited FSA allows you to purchase eligible out-of-pocket dental, vision and/or preventive care expenses with pre-tax dollars when you’re participating in a High-Deductible Health Plan and an Health Savings Account. You save money because you don’t pay taxes on the money you set aside. It’s a great perk from your employer, and it will save you money.
Limited FSA Eligible Expenses
• Dental treatment
• Vision correction procedures (e.g. Lasik)
• Annual physicals
• Dental co-insurance/co-pays/deductible • Eye exams
• Screenings (e.g. Lifeline)
• Prescription glasses and sunglasses
• Tobacco cessation programs (with Rx) • Some weight loss programs (with Medical Necessity Form)
• Contact lenses
• Contact solutions/cleaning products
• Vision screenings
• Birth control (with Rx)
• Refractions • Eye drops
• Flu shots
• Denture adhesive and cleaners
• Well child/prenatal visits
*Preventative care generally does not include any service or benefit intended to treat an existing illness, injury or condition.
Please contact our Participant Services team if you have any questions about your benefits. Toll Free: 866-451-3399 | Hours: M-F 6:00 am-9:00 pm CST firstname.lastname@example.org
• Medical co-insurance/ co-pays/deductible • Medical expenses • Mental health expenses • Chiropractic expenses • Cosmetic services
• Most over-the-counter drugs • Prescription co-insurance/co-pays • Toothbrushes • Insurance premiums
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