Frequently Asked Questions - FSA
Why use a flexible spending account (FSA)?
Flexible Spending Accounts allows the account holder to save for expected out-of-pocket expenses such as medical, dental, vision and childcare. The primary benefit to an FSA is that the funds are set aside via payroll deduction on a pre-tax basis, thereby lowering the tax burden for medical and childcare bills. Penn State offers a Healthcare FSA and a Dependent Care FSA.
Can I enroll in the Health Care FSA if my spouse is enrolled in a high-deductible health plan with a Health Savings Account (HSA)?
No. The IRS does not permit use of a health care FSA when enrolled in an HSA. However, the Dependent Care FSA is available to either employee up to the IRS limits.
When must reimbursable expenses be incurred?
Eligible expenses must be incurred from January 1 through December 31 of the year in which the funds are contributed. Claims must be submitted for processing no later than March 31 of the following calendar year. In addition, unused funds of up to $500 in a healthcare FSA may be carried over to the following plan year. Any funds in excess of $500 at the end of any plan year will be forfeited.
Will these amounts be taxable at a later date?
No. This is not a tax deferral but is a method to legally reduce the amount of your taxable income.
What are the minimum and maximum amounts I can elect to contribute to my FSA?
The minimum amount is $10 per month or $120 per year. The maximum amount in 2018 is $2,600 for a healthcare account and $5,000 per household for a dependent day care account.
Do I have to have a Penn State medical plan in order to have an FSA?
No, you do not. Employees who are not enrolled in a Penn State medical plan will be able access their elected FSA account through their My HealthEquity login.
Can I change my contribution amounts?
Making changes to FSA contributions is limited to the annual open enrollment period, with the following exceptions:
- Birth or adoption of child(ren)
- Death of a spouse or dependent
- Termination or commencement of spouse's employment (changes to health care flexible spending account is valid only if health benefits provided by your spouse's employer begin or end as a result of the change)
- Change in your work hours or your spouse's work hours (Dependent care expenses only);
- Change in the cost of dependent care - if the amount that you pay for day care increases or decreases during the year, you may adjust your dependent day care deductions accordingly within 31 days of the date of the change
Any change to FSA contributions must, by law, be on account of and consistent with the change in family status. To change a contribution because of a life event, account holders should complete a change request in Workday within 31-days following the event.
May I use the FSA for my children?
Yes, the healthcare FSA may be used for any children that are eligible for coverage under the employee's plan; including dependents to age 26. Dependent day care expenses are allowed for children under 13.
Will there be changes to the online enrollment process?
No, enrollment continues to take place online during the annual Benefits Open Enrollment period, or within 31 days of the hire date for new employees. The online enrollment is completed in Workday.
Will I receive a debit card with my healthcare FSA?
Yes, you will receive a healthcare Visa debit card in the mail with instructions on how to activate. Your debit card will be mailed to your home and will have a sticker with a phone number to call for activation. The debit card will NOT require a “pin number.” The debit card can be used for health care FSA expenses only – dependent care expenses cannot be paid using the debit card.
Do I need to keep my receipts for purchases made with my spending account debit card?
Yes, you should ALWAYS retain receipts for purchases made with your debit card for tax purposes, as you may be requested to provide receipts for certain purchases. You are being issued the debit card for the convenience of being able to access your FSA funds at the point of sale. Even though you can access these funds easily, HealthEquity and Penn State still must be able to “substantiate” that all purchases made were for eligible products and services under the FSA. In situations where HealthEquity is not able to substantiate the purchases automatically, you will receive a letter asking for documentation or receipts. There will also be notifications on the HealthEquity web site if your claim needs additional attention. If you are not able to provide documentation you may lose the ability to use your debit card. If you are not covered under the Penn State medical plan, but are covered through another employer or individual carrier, you will be required to “substantiate” all of your services, as HealthEquity will not have access to those claims.
Will I receive receipt request letters (i.e. debit card substantiation requests)?
Yes. As stated earlier when substantiation is required, HealthEquity will send you letters requesting that you supply receipts. Again, this is very important to comply with IRS regulation and failure to comply may result in an inability to use the debit card in the future.
I have used my debit card for a wide variety of services, and then received substantiation requests. How can I avoid this in the future?
To avoid receiving substantiation requests, simply do not use the debit card for purchases other than prescriptions and office visit copayments. You can pay for other services online directly to the provider or yourself. There are several methods to use your account; you are not required to use the debit card, as it is just one of the options. Please contact HealthEquity at 866-346-5800 if you want to learn more details about the methods to utilize your FSA dollars.
How do I access my FSA funds for current year expenses?
There are four ways for you to receive payment through your FSA:
- Health Care Debit card – which can be used at the point of purchase for doctor’s office visit copayments, prescription drug coinsurance (including drugs purchased at UHS), medical deductible and coinsurance, dental services and vision services.
- You can access your claims through the HealthEquity web site and submit the claims to have your cost share (copayments, deductibles, and coinsurance) automatically paid to your network provider. This feature will apply only to those enrolled in the Penn State medical, dental, and/or vision plan(s).
- You can submit a claim through the HealthEquity web site and have payments deposited into your bank account.
- You can submit a claim through the HealthEquity web site and have a check mailed to you.
Can I order additional debit cards, and are there any additional costs for doing so?
You will automatically receive one debit card prior to the start of your new plan year, if you did not participate in the previous year. If you want an additional card you may order it on the member website or by calling HealthEquity at 866-346-5800.
Will I receive a new debit card each year?
No, you should keep your card from year to year. Each year you elect an FSA the card will be “reloaded” with your new FSA amount election.
Will I have the ability to view debit card information online, and if so, what type of information can I view online?
Yes, you will be able to view debit card transactions/activity on-line. You can view your account balance and your prior transactions – including the merchant and amount withdrawn.
Who will I contact for questions about my account and debit card?
For the quickest answers, you should log into your My HealthEquity account. If you need additional assistance, you should call HealthEquity at 866-346-5800.
For the dependent care account, what documentation is required? What is the procedure for submitting dependent care FSA claims?
How do I use the website to access my funds?
You will access your flexible spending account through your My HealthEquity login. Begin by registering via the instructions that are sent to you from HealthEquity. These instructions may arrive via email or in postal mail to your home address on file with Penn State.
How will I get a claim form if I need to submit a claim manually?
You are able to obtain FSA claim forms directly from your My HealthEquity online account.
Will notification be provided when my claim is received?
Yes. You may sign up for electronic notifications from your HealthEquity account.
Will I be notified if my claim is denied?
Yes, you will receive a denial notice if your claim is denied. There will also be online notifications when you have claims that need additional information from you in order to process successfully. If you are managing your account online, these notifications will help you avoid receiving denial notices.
What do I do if my claim is denied?
If you believe that your claim was denied in error, you can contact HealthEquity customer service at 866-346-5800. You will be notified of the appropriate procedure should you wish to pursue an appeal.
Will I receive spending account statements and will I have the ability to print a statement of my claims activity?
Yes. You will receive electronic statements which you can print. You can also print your claim activity from your My HealthEquity account.
Will I be able to pay my providers directly from my account (Direct Payment to Provider)?
Yes, you will be able to pay your network medical providers directly from your spending account when you submit your FSA claims online from your My HealthEquity account. When the claim completes processing, you have the ability to direct your cost share (deductible, coinsurance, copayments) to be paid directly to your network provider with a click of a button. In most cases, you can complete this process before your provider sends you a bill.
Will my provider receive an Explanation of Payment (EOP)?
When you direct a claim to be paid directly to your provider, the provider will receive an EOP for payments made to them from your spending account on your behalf.
Will I be able to pay providers on medical claims that have been adjusted?
If your medical claim has to be reprocessed or adjusted, your spending account reimbursement may also have to be adjusted. Some claims are reprocessed or adjusted weeks or months after the original processing. In order to ensure that the provider is not overpaid, any payments that occur after the original claim is processed will be sent to you, not the provider.
Will I be able to pay my dental or vision providers directly out of my spending account?
Dental and Vision reimbursement requests are able to be paid directly to providers as well. You may use also your health care debit card for payment at point of service or to pay bills you receive. Just remember to save your receipts for “substantiation.”
When will a payment NOT be eligible for Direct Payment to Provider (DPTP)?
There are several reasons that a transaction would not be eligible for DPTP: if there are no funds in the account, if the provider’s tax information cannot be verified, or if the transaction is a claim that had to be reprocessed. Situations where the provider’s tax information cannot be verified should be very rare, but every effort is made to validate each provider. If payment is not able to be made to the provider, then payment will come to you instead.
How long do I have to pay a claim to a provider?
For manual reimbursement requests, you may choose to pay the provider at any point. You are responsible for ensuring that you do not overpay the provider in such situations.
How do I know where to send my claims to? Is there an address and fax number?
Submitting your reimbursement requests online is the fastest and most efficient method to utilize for reimbursement requests. However, if you need to submit the claim manually, the claim form available on the website contains the mailing address and fax number.
For manual claims submission, will I be able to change my method of reimbursement?
You will be able to choose if you would like to receive money via direct deposit or check to your home. Note that direct deposit provides the quickest and most convenient way to receive your reimbursement.
How do I set up the direct deposit option?
In order to activate the direct deposit option, login to your My HealthEquity account. There will be options to add your direct deposit banking information to your account.
How will I know when my claim has been paid?
If you have elected direct deposit and set up your banking information in your My HealthEquity account, you will be notified when payment has been made. Otherwise you will receive a check in the mail.
What customer service phone number do I need to use?
You will use the HealthEquity customer service number; 866-346-5800.
How do I find out which expenses are eligible for reimbursement?
A list of eligible expenses for spending accounts has been provided by HealthEquity.
The following are examples of eligible and ineligible out-of-pocket expenses:
Eligible Out-of-Pocket Expenses
- Deductibles, copayments, and amounts in excess of plan allowances or maximums of hospital/surgical/major medical, dental and vision plans
- Prescription medicine coinsurance
- Hearing aids, including batteries
- Orthodontia (amount exceeding dental plan benefit)
- Lodging away from home primarily for and essential to medical care
- Transportation for needed medical care
- Dental procedures not covered by insurance
- Lasik eye surgery
- Contact lens solutions and other vision services not covered by your vision plan
- Over-the-counter medications when submitted with a written prescription from your doctor
- Items designed to treat an injury, such as bandages and antiseptics
- Medical equipment such as crutches and diagnostic devices such as blood sugar test kits and blood pressure monitors
Ineligible Out-of-Pocket Expenses
- Insurance premiums of any type (spouse's group plan, school plan, Medicare premiums, etc.)
- Expenses for your general health such as health club fees
- Purchase or repair of exercise equipment
- Cosmetic surgery/procedure which is directed at improving appearance and does not meaningfully promote the proper function of the body or prevent or treat illness or disease
- Over-the-counter items such as vitamins, dietary, minerals, fiber and herbal supplements and dental care items that are designed for general maintenance of good health
More specific information is available in IRS Publication 502 (Medical and Dental Expenses) and IRS Publication 503 (Child and Dependent Care Expenses).
NOTE: IRS Publication 502 provides guidance for determining if an expense qualifies as a deduction on your federal income tax. While Health Care FSAs use this publication for guidance, there are some distinct differences between eligible income tax deductions and eligibility for reimbursement from a Health Care FSA. Some of the more significant differences are:
- Insurance premiums of any kind are ineligible for reimbursement from an FSA.
- Over-the-counter medications that treat or alleviate a specific medical condition are eligible for reimbursement from an FSA (Until Dec 31, 2010, then they are no longer eligible) but are ineligible as an income tax deduction.
- Eligibility for reimbursements is determined by the date that the service was provided, not when the bill was received or paid.
How do I get reimbursed for orthodontia expenses?
You may use your debit card, pay your claim direct to the provider, submit your claim via your My HealthEquity account, or submit a paper claim form to request reimbursement for your orthodontia expenses. Once your dental carrier has processed your orthodontia claim, you can submit for payment via your method of choice for the portion of your member responsibility. You will need to submit documentation including a statement from the orthodontists showing the name of the person receiving the treatment, the beginning date of the treatment, the amount of the treatment, and your member responsibility.
What is the deadline for submitting my claims for reimbursement?
All FSA reimbursements must be submitted to your HealthEquity FSA no later than March 31 of the following calendar year for active employees, for claims incurred during the plan/calendar year.
If you have terminated or retired, you have 90 days from the termination/retirement date to submit receipts for reimbursement. Please note that you may only submit receipts that incur on or before your termination/retirement date.
If the charges I incurred are more than what has been contributed to my health care account, do I have to wait until the money is in my health care account before I can be reimbursed?
No, you can be reimbursed your total yearly amount any time during the year from your healthcare FSA.
Who are eligible dependents for Dependent Care FSA?
Eligible dependents include children under 13 who qualify as a tax dependent, children 13 or older with a disability, and those who qualify as a tax dependent including spouses or persons with a medical or physical inability to care for themselves.
Are kindergarten expenses eligible for Dependent Care FSA reimbursement?
No. Kindergarten is considered to be educational in nature. Therefore, kindergarten expenses are not eligible for reimbursement.
Are nursery school expenses eligible for Dependent Care FSA reimbursement?
Yes. Nursery school or similar programs below kindergarten level are expenses considered to be eligible for reimbursement.
Are payments to babysitters eligible for reimbursement under a Dependent Care FSA?
Incidental babysitter services is not an eligible expense. However, if you have an individual who provides child care services while you are at work, whether the care is provided in your home or theirs, as long as they claim the amount you pay them as taxable income, you can be reimbursed for those expenses. In addition, the individual providing care cannot be the child of employee who is under the age of 19, cannot be a child claimed as a dependent on the employee or spouse’s tax return, cannot be the spouse of the employee nor be the parent of the child.
How much can I allocate to my Dependent Care FSA?
You may allocate up to $5,000.00 per year as an individual head of household or if you are married filing your taxes jointly. If married filing separately, the maximum contribution per individual is $2,500 per year.
Can my spouse and I both have a Dependent Care FSA?
Yes. Each of you is limited to $2,500.00 per year and each expense can only be reimbursed from one of the accounts. The $5,000.00 IRS maximum is per household.
If I request reimbursement of dependent care expenses can I also receive tax credit for these expenses?
You may not receive reimbursement of expenses under your Dependent Care FSA and claim the Dependent Care Tax Credit for the same expenses on your Federal Income Tax return. Some participants may benefit more by claiming the Dependent Care Tax Credit. You should consult with your tax professional to determine which will provide you the greater benefit.
Can I be reimbursed for the full annual amount of my Dependent Care FSA at any time during the plan year?
No. Unlike healthcare FSAs, Dependent Care FSAs allow you to be reimbursed for amounts that are actually contributed into your account. Therefore, you must wait for reimbursement until the money is credited to your account, provided that you have already incurred the expense.
Do I have to pay taxes on the money I contribute to my spending account?
No. You can elect to reduce your pay so your contributions are drawn from your pay before your Federal Income Tax withholding is determined.
Do I have to pay State Income Tax on the money I allocate to my spending account?
Some, but not all, states allow you to contribute to your Dependent Care FSA on a pre-tax basis.
Can I submit FSA Claims if my employment ends?
You may submit claims incurred up to your employment termination date. However, all claims must be submitted within the 90 day run-out period outlined in your plan.
Can I be reimbursed for an expense that was incurred before I signed up for a spending account?
No. You cannot incur an expense and then decide to open an FSA. All expenses must be incurred after your account has started to be eligible for reimbursement.