FSA - Medical Reimbursement Account

The City of Salem will continue to partner with FBA to administer the flexible spending accounts.

What is a Flexible Spending Account (FSA)?

Flexible Spending Accounts allow employees to pay for IRS-approved expenses with pre-tax dollars. Eligible Expenses include all expenses outlined in the IRS Publication 503.  You can obtain a copy of this publication from the Internet at https://www.irs.gov/pub/irs-pdf/p503.pdf or by calling 1-800-TAX-FORM. There are three FSA options: Healthcare FSA (for KeyCare 30 Plans), Limited Benefit FSA (for Lumenos HSA enrollees), this plan covers dental and vision out-of-pocket expenses), and Dependent Care FSA. Your health care and limited benefit FSAs are pre-funded accounts.  This means the amount you elect for the plan year will be in your account on the first day of the plan year and available for reimbursement of eligible health care expenses.  You will pay each pay period to cover those funds.  The dependent care account, on the other hand, is not pre-funded.  The amount you contribute per pay period is the amount that is in the account and available for reimbursement.

Unlike an HSA, an FSA Account is a “Use it, or Lose it” account. Only put money into your FSA for expenses that you know you will incur during the year because money not used during the calendar year or the grace period that follows will be forfeited. There is a 2 ½ month grace period for incurring expenses so if you have money left over at the end of the calendar year, you can use expenses incurred up to March 15, 2023 against your 2022 balance.  Please note that the grace period is not available on a dependent care FSA.

Are you eligible to open a Flexible Spending Accounts (FSA)?

There are three FSA options.  If you are enrolled in the KeyCare plans, you may enroll in the Health Care FSA and file for reimbursement of any IRS-approved health expenses.  If you are enrolled in the Lumenos HDHP plan, you are NOT eligible for the healthcare FSA.  However, if you are expecting to have out of pocket expenses for vision or dental, you can enroll in the limited benefit FSA.  

If you pay for dependent care expenses for children up to age 13, a disabled dependent of any age, or a disabled spouse, you may enroll in the dependent care FSA and reimburse yourself for out-of-pocket dependent care expenses with pre-tax dollars.  A debit card is provided if you enroll in the health care or limited benefit FSA.  This card is a convenient way to pay for your eligible out-of-pocket expenses at the time of service.  You must re-enroll each year if you would like to participate in the FSA.

2022 FSA Contributions

The IRS has not yet announced the 2022 maximum FSA contributions. The 2021 FSA contribution limits are included below:
2021 TAX YEAR ANNUAL LIMITS:
•    Health Care FSA - $2,750
•    Dependent Care FSA - $5,000 ($2,500 if married filing separately)

How do I get reimbursed for my eligible expenses?

The easiest way to use your FSA dollars is by using your FSA Debit Card at the time you incur an eligible expense. Make sure to keep receipts!  Your administrator may request a receipt as proof that the expense was incurred and, if you are audited by the IRS, you may need receipts as well.  If you do not use your debit card, you can file for reimbursement directly with FBA.    All requests for reimbursement must be submitted to FBA no later than March 30, 2022 in order to avoid any forfeiture of funds remaining in the account.

 

Health Savings Account

When you are enrolled in a Qualified High Deductible Health Plan (QHDHP) and meet the eligibility requirements, the IRS allows you to open and contribute to an HSA Account.

2022 HSA Administration

City of Salem continues to partner with Flexible Benefit Administrators (FBA) to administer our HSA. If you currently participate in Flexible Benefits, please make sure to hold onto your current FBA Benefits Card so that you can access your Avidia HSA funds once they are available.

New HSA participants will receive your Avidia Welcome Kit in an email titled: “Welcome to your Avidia HSA!” Please make sure you read through this email thoroughly. It will also contain the form to send in to Avidia to order checks. Avidia does not automatically send checks out; you must fill out a check order form to receive checks. Please note that this Welcome Kit email will not be sent out until your account enrollment has been completed. In order for your enrollment to be completed, you will receive an email from Avidia to review and agree to the HSA disclosures. Once this step has been completed, the Customer Identification Program (CIP) check process will initiate in accordance with USA Patriot Act, which typically takes 1-2 business days to complete. If the bank requires any additional information for the CIP check, an email will be sent to you requesting specific documentation.

What is a Health Savings Account (HSA)?

An HSA is a tax-sheltered bank account that you own to pay for eligible health care expenses for you and/or your eligible dependents for current or future healthcare expenses. The Health Savings Account (HSA) is yours to keep, even if you change jobs or medical plans. There is no “use it or lose it” rule; your balance carries over year to year.

Plus, you get extra tax advantages with an HSA because:

  • Money you deposit into an HSA is exempt from federal income taxes
  • Interest in your account grows tax free; and
  • You don’t pay income taxes on withdrawals used to pay for eligible health expenses. (If you withdraw funds for non-eligible expenses, taxes and penalties apply).
  • You also have a choice of investment options which earn competitive interest rates so your unused funds grow over time.

Are you eligible to open a Health Savings Account (HSA)?

Although everyone is able to enroll in the Qualified High Deductible Health Plan, not everyone is eligible to open and contribute to an HSA. If you do not meet these requirements, you cannot open an HSA.

  • You must be enrolled in a Qualified High Deductible Health Plan (QHDHP)
  • You must not be covered by another non-QHDHP health plan, such as a spouse’s PPO plan.
  • You are not enrolled in Medicare.
  • You are not in the TRICARE or TRICARE for Life military benefits program.
  • You have not received Veterans Administration (VA) benefits within the past three months.
  • You are not claimed as a dependent on another person’s tax return.
  • You are not covered by a traditional health care flexible spending account (FSA). This includes your spouse’s FSA. (Enrollment in a limited purpose health care FSA is allowed).

2022 HSA Contributions

You are able to contribute to your Health Savings Account on a pre-tax basis through payroll deductions up to the IRS statutory maximums. The IRS has established the following maximum HSA contributions:
FOR THE 2022 TAX YEAR:

  • $3,650 Individual
  • $7,300 Family
  • If you are age 55 and over, you may contribute an extra $1,000 catch up contribution.

How do I get reimbursed for my eligible expenses?

The easiest way to use your HSA dollars is by using your HSA Debit Card at the time you incur an eligible expense. Or you can withdraw money from an ATM. But keep your receipts! You must be able to prove that you were reimbursing yourself for an eligible expense in the event that you are audited by the IRS. If you use your HSA funds for non-eligible expenses, you will be charged a 20% penalty tax (if under age 65) as well as federal income taxes. You can manage your HSA through Avidia Bank. For additional guidelines, please go online or call Flexible Benefit Administrators, Inc.

 

FSA - Limited Medical Reimbursement Account

Who should enroll in the Limited FSA Plan?

If you are participating in the Health Savings Account, you must enroll in the Limited FSA Plan if you wish to participate under an FSA Plan for the renewing Plan Year that runs from January 1 - December 31, 2022. Although you are not required to participate in the Limited FSA, you should do so if you want to enroll in the Health Care Reimbursement Program and make HSA contributions (or want to remain eligible for any discretionary employer contributions to your HSA). The maximum you may place in this account for the Plan Year is $2,750.

What expenses can be claimed under a Limited FSA?

Under the modified FSA, the HealthCare Reimbursement Program will only reimburse you for “medical care” (as defined in the Tax Code) that is dental, vision, or “preventive care.”

Examples of Dental and Vision Expenses

  • Cleanings
  • Fillings
  • Crowns
  • Orthodontia
  • Extractions
  • Dentures
  • Contact Lenses
  • Eye Glasses
  • Eye Exams/Procedures
  • Vision Correction Procedures

What are some ineligible expenses under a Limited FSA?

  • Your co-payments, deductibles and co-insurance payments for any expenses not related to preventive care
  • Cosmetic dental procedures (veneers, teeth whitening service or products)

Are prescriptions and over-the-counter products eligible under a Limited FSA?

Drug costs, including over-the-counter drugs may be reimbursed if they are considered for dental, vision, or preventive care expenses. Drugs or medications will fall within the guidelines when they are taken by a person who has developed risk factors for a disease that has not yet manifested itself or has not been clinically apparent (no symptoms yet developed). The drugs could also be taken to prevent the recurrence of a disease from which a person has recovered.

Examples of preventive care eligible expenses:

  • The treatment of high cholesterol with cholesterol-lowering medications to prevent heart disease or the treatment of recovered heart attack or stroke victims.
  • Drugs or medications used as part of procedures providing preventive care services such as obesity, weight-loss and tobacco cessation programs.
  • Screenings: Cancer, Heart and Vascular diseases, Infectious diseases, Mental Health conditions, Substance Abuse, Metabolic, Nutritional, and Endocrine conditions, Musculoskeletal disorders, Obstetric and Gynecologic conditions, Pediatric conditions and Vision and Hearing disorders.

Helpful hints on the administration of a Limited FSA

Diagnosis information to determine whether a particular medication (that may also be used to treat an existing condition) is being prescribed for preventive purposes may be requested to determine whether a drug or medication is being used to prevent or treat an illness.

Letters of medical necessity for Limited FSAs must specifically state that the medication is being used to prevent an illness. In example #1 above, a letter could state that “Mary needs to take Lipitor to prevent heart disease due to the fact that she has a family history of heart disease.”

A letter of medical necessity for prevention of an illness will also be required for any OTC drug.

If you have any additional questions regarding what is or isn’t covered under a Limited FSA Plan, please contact Flexible Benefit Administrators, Inc. at (800) 437-3539 or FlexDivision@flex-admin.com.

Important Information

Flexible Spending Accounts (FSAs) allow you to pay certain healthcare and dependent care expenses with pre-tax money. (The key to the Flexible Benefit Plan is that your eligible expenses are paid for with Tax Free Dollars.) You will not pay any federal, state or social security taxes on funds placed in the Plan. You will save between, approximately, $27.65 and $37.65 on every $100 you place in the Plan. The amount of your savings will depend on your federal tax bracket.  Please click the following link for a high-level overview of Salem's FSA.

Below you will find forms and links that will provide you with further information on Health Care Flexible Spending Accounts (FSAs), Dependent Care Flexible Spending Accounts (FSAs), Health Reimbursement Arrangements (HRAs) and Health Savings Accounts (HSAs). Some plans restrict the eligible expenses, such as Limited Scope FSAs or Deductible Only HRAs. Please refer to your employer's Summary Plan Description (SPD) listed below for your specific plan details.

If you are participating in the Health Savings Account, you must enroll in the Limited FSA Plan if you wish to participate under an FSA Plan for the renewing Plan Year that runs from January 1 – December 31, 2022.   Although you are not required to participate in the Limited FSA, you should do so if you want to enroll in the Health Care Reimbursement Program and make HSA contributions (or want to remain eligible for any discretionary employer contributions to your HSA).

Flexible Benefits Administrators is partnered with FSA Store, the only e-commerce site exclusively stocked with FSA eligible products, to help you spend down and manage your FSA. FSA Store and Flexible Benefits Administrators work together to eliminate the guesswork behind what is reimbursable by an FSA and HSA.

 FSA Store Coupon

FSA Store