Use an FSA to Pay for Health Care Expenses

Questions?
Contact MyFlex Advantage at
1-800-994-2752, option 2, option 3 or visit www.upmchealthplan.com/MyFlex.

Eligible Health Care FSA Expenses:

medical, dental, or vision deductibles
physician office visit and prescription copays
unreimbursed orthodontic expenses — adult and child
hearing aids and exams
laser eye surgery
in-vitro fertilization
eyeglasses, contacts, and vision exams
select over-the-counter medications (aspirin, antacids, cold and allergy medicine, pain relievers)

The above is not a complete list. For a complete list of the more than 100 eligible expenses, visit the MyFlex Advantage website at www.upmchealthplan.com/MyFlex.

Interested in a health care flexible spending account (FSA)? The first step is to review the eligible expenses listed at right and compare it to your out-of-pocket medical expenses. If you find you have recurring or predictable eligible expenses, an FSA can help you stretch your income. The 20 to 40 percent savings is worth taking a closer look.

How does a Health Care FSA work?

When electing a health care FSA, you decide the amount to put into your account. A pretax deduction will be taken in equal installments from each pay during the year (coverage effective date through Dec. 31) to total your pledge amount. On the first day of the coverage, the full pledge amount of your health care FSA is available for use. As you incur eligible expenses, you either use your FSA debit card to pay at the point of sale, or pay with other funds and seek reimbursement from your FSA account.

Contributions to Your Account: It’s Your Decision

How do you know how much to put into your health care FSA? A good way to start is by reviewing your health care expenses from the previous year and then estimate your anticipated expenses for the new plan year. There is an annual maximum of $5,000 per employee.

Two Ways to Access Your Funds

Participants in the health care FSA have two options to use their account:

an FSA debit card can be used directly at the point of sale to pay for an eligible expense, or
participants can pay for the expense out-of-pocket and then submit for reimbursement from their FSA.

Save Your Receipts

Because the IRS requires documentation of your expenses, you may be asked to submit a receipt after you pay for items (especially over-the-counter medications) and services with the debit card. This documentation is needed to verify the eligibility of the expense and, if not provided, could result in a suspension of your card privileges. The FSA administrator will notify you when an expense requires substantiation. As the administrator of the MyFlex Advantage program, UPMC Health Plan has the ability to offer enhanced automatic substantiation, providing reduced requests from Health Plan participants.

Timeframe to Use and Claim the Funds

Funds in an FSA generally must be used in the plan year of participation. For UPMC, there is a “grace period”, which extends the timeframe to incur eligible health care expenses. This extension allows an additional 2.5 months (until March 15) beyond the plan year to use any remaining balance from the prior plan year. Once expenses have been incurred, all claims must be submitted by April 30 following the end of the plan year.

For example, staff electing a health care FSA for 2009 may incur expenses from coverage effective date, through March 15, 2010, and use FSA dollars contributed during 2009. April 30, 2010, is the final deadline to submit claims for services incurred from coverage effective date, to March 15, 2010.

Staff whose accounts terminate during the year, for reasons such as employment termination or a change to an ineligible job status, have until the end of the month of their termination to incur expenses. All claims must be submitted by April 30 following the end of the plan year.

Don’t Forget – “Use It or Lose It”

Keep in mind that a "use it or lose it" rule applies to FSAs so it is important to estimate carefully when determining your annual pledge amount. The Internal Revenue Service requires participants to forfeit funds not used by the deadline. The health care FSA “grace period” helps you to reduce your remaining health care balance before the funds are forfeited.

If you enroll in the health care FSA for 2009, you will be issued a MyFlex Advantage debit card to be used for expenses incurred as of your coverage effective date. Staff and spouses electing a UPMC medical option and a health care FSA will each be issued one card for use both as their medical coverage ID card and as their FSA debit card.

Still Unsure?

Consider this example:

A staff member earning $30,000 annually learns her child will need braces. The braces will cost $3,065. Her out-of-pocket charge is $1,400, which is spread over 24 months.
The staff member chooses to contribute $840 for the year — or $70 per month — to her FSA to pay for the $700 in out-of-pocket costs for the braces in 2009 and another $140 to pay for other uncovered medical expenses, such as copayments for prescriptions, for the year.
The money she contributed to the health care FSA and the amount she was reimbursed are not subject to federal, state, or Social Security (FICA) taxes. This staff member saw $840 deducted from her pretax income and saved $190 in taxes for the year.

Return to FSA Home Dependent Care FSA

Benefits described may not be applicable to all staff. Some business units have unique benefit programs, certain job classifications may affect benefit eligibility, and contract terms determine benefits for physicians and members of collective bargaining units.