A Flexible Spending Account Plan (“FSA”) offers an easy and convenient way for employees to save money on taxes and make their benefit dollars go further. Employees using a Health Care and/or Dependent Day Care FSA put money aside on a pre-tax basis to pay for eligible health care and/or dependent day care expenses. Health Reimbursement Accounts ("HRAs") also offer tax benefits, as employer contributions are generally not taxable to the employee
The Internal Revenue Service places certain rules on FSA contributions and distributions as a condition of allowing participants to receive the tax-favored benefits of FSA participation. Similar restrictions are placed on reimbursements from HRAs. One of those restrictions is that all claims must be substantiated with supporting documentation that meets certain requirements. This article reviews the requirements participants must follow to submit FSA/HRA claims to BAS for reimbursement within the requirements of IRS regulations.
Health Care FSA Claims/ HRA claims
To be reimbursed from a Health Care FSA or an HRA, the item must be
For medical care, not for general health or cosmetic purposes. If the expense has a dual purpose (could be both medical and non-medical), a Letter of Medical Necessity from a health care provider must be submitted with the expense. See below for the requirements of a Letter of Medical Necessity.-
Incurred by the participant, spouse or tax dependent for health coverage purposes or for a child who is under age 27 as of the end of the taxable year. Employers may place additional restrictions on whose expenses may be reimbursed from an FSA or HRA. - Incurred during the period of coverage and during the Year (incurred and not just paid). Please note-
advance payment is not permitted, except in limited situations, such as for orthodontia (with supporting documentation). - Prescribed if an over-the-counter medicine or drug. The prescription must be from a licensed physician and must clearly describe the medicine or drug to be purchased. BAS will accept a prescription if it includes
Doctor’s Name- Doctor’s License Number
- Date
- Patient’s Name
- Description of Drug (specific description of drug, “cold medicine” or “allergy medicine” not sufficient)
Adequate Documentation for Health Care FSA/HRA Reimbursement Request
A participant must submit a completed BAS Health Care FSA/HRA Claim Form, along with appropriate receipts, Explanation of Benefits, prescriptions, and/or Letters of Medical Necessity showing the eligible expense was incurred.
Claim Form
BAS provides a bar-coded and non-bar-coded Health Care FSA claim form. To print a bar-coded claim form, a participant should go to MyEnroll.com and sign into his or her account using the User ID and Password. A claim form can be accessed in the left-side of the menu on the employee home page. A non-bar-coded claim form can be printed at www.MyEnroll.com without logging into the site.
The claim form must be signed and dated. Expenses should be identified, along with dates of service and the individual whose expenses are being submitted. A separate claim form should be used for each individual's expenses.
As a summary, a health care FSA claim form checklist should include:
- Sign
- Date
- List Expenses
- List Dates of Service
- Identify whose expenses (participant, dependent)
- Amount of Claim
Receipts
Supporting receipts, EOBs or billing statements must be submitted with the completed claim form. A receipt must contain all of the following elements to be considered an adequate receipt under IRS rules. Credit card receipts and/or cancelled checks are not adequate documentation.
Medical Service - (BAS will accept an itemized receipt or an EOB from the insurance company or health care provider that contains the following)
- Patient Name
- Provider Name
- Date of Service
- Description of Service (or procedure code)
- Amount Paid
Medical Item
- Merchant Name
- Date of Purchase
- Description of Item
- Amount Paid
Prescription
- Name of Patient
- Name of Pharmacy
- Date (fill date)
- Prescription Number
- Amount Paid
OTC Drug or Medicine
- Prescription Required
- Doctor’s Name
- Doctor’s License Number
- Patient’s Name
- Date
- Description of Drug (specific description- “cold medicine” or “allergy medicine” not sufficient)
- Receipt Required
- Merchant Name
- Date of Purchase
- Description of Item
- Amount Paid
If the item for which reimbursement is being sought has both a medical and a non-medical purpose (a massage, for example), a Letter of Medical Necessity from the doctor must be submitted confirming that the item is for medical care. BAS will request a new Letter of Medical Necessity each Plan Year. A Letter of Medical Necessity must include:
- Patient Name
- Doctor Name
- Date of Issue
- Diagnosis
- Service or Supply Needed
- Statement or support that service or supply is medically necessary to treat diagnosis
- Length of Service (if applicable)
Dependent Day Care FSA Reimbursement
To be reimbursed from a Dependent Day Care FSA, the item must be
- For day care to allow the employee and spouse to work or look for work
- Typical examples
- Babysitter (not parent or other child/stepchild under age 19)
- Family day care/child care/dependent care
- Home care
- Backup or emergency care
- Preschool expense (not kindergarten or higher)
- Day camp (not overnight camp)
- Before and after school non-educational day care
- Typical examples
- For a qualifying individual
- Child under age 13
- Dependent age 13 or older who is incapable of self-care
- Incurred during the period of FSA coverage and during the FSA Plan Year (The day care expense must have actually been incurred during the Plan Year, not just billed or paid.)
Documentation for Dependent Day Care FSA Reimbursement Request
To request reimbursement from a Dependent Day Care FSA, the participant must submit a completed BAS Dependent Day Care FSA Claim Form, along with appropriate receipts showing the eligible expense was incurred for an eligible dependent.
Claim Form
BAS provides a bar-coded and non-bar-coded Dependent Day Care FSA claim form. To print a bar-coded claim form, the employee should go to MyEnroll.com and sign into his or her participant account using their User ID and Password. A claim form can be accessed in the left-side of the menu on your employee home page. A non-bar-coded claim form can be printed at www.MyEnroll.com without logging into the site.
The claim form must be signed and dated. The expenses being submitted for reimbursement must be identified, along with dates of service and the provider’s taxpayer ID number (Social Security Number if the care is provided by an individual). If the participant cannot produce a taxpayer ID or Social Security number for the day care provider, the participant must provide a statement saying that they attempted to obtain the number but could not.
As a summary, a Dependent Day Care claim form checklist should include:
- Sign
- Date
- Identify Qualified Dependent
- Provider’s Signature and Date (or provide receipt)
- Taxpayer Identification Number (or SSN) (or statement that tried to obtain TIN/SSN)
- Description of Services
- Amount of Claim
Receipts
If the Provider does not sign and date the completed form attesting to each expense, supporting bills/receipts must be submitted with the completed claim form. A bill/receipt must contain all of the following elements to be considered adequate under IRS rules. Credit card receipts and/or cancelled checks are not adequate documentation.
Bill/Receipt
- Name of Qualifying Dependent
- Name and Address of Provider
- Date of Service
- Description of Service (if not evident from name on receipt)
- Provider’s Taxpayer Identification Number/SSN (if not on claim form or if statement not provided that tried to obtain the TIN/SSN)
FSA Claim Submission
Participants may mail or fax completed claims to BAS for processing.
Mail or Fax To:
BAS
P.O. Box 62407
King of Prussia, PA 19406
FAX: 1.888.265.2144
For more information, please contact Sales@BASusa.com.
