Flexible Spending Accounts

1. What is a Flexible Spending Account?
2. How does my account work?
3. How do I get my money back?
4. What happens if I do not use all my money?
5. What happens if I retire or quit?
6. What can I use Flexible Spending dollars for?
7. What is the difference between a Flexible Spending HCA and DCA?
8. Where do I get my forms?
9. How do I keep track of my balance?
10. Whose expenses can I claim under a Flexible Spending Account?
11. What counts as documentation?
12. I misjudged my Flexible Spending Account needs—can I change my election during the year?
13. What is my plan year?
14. What are the deadlines for claims submissions?
15. What is the grace period?

Flexible Spending Accounts

Q: What is a Flexible Spending Account?

A: A Flexible Spending Account is money taken out of your paycheck before taxes to pay for either medical expenses or for dependent care. Dependent care is defined as money spent to take care of dependents that cannot take care of themselves (i.e., young child, elder or disabled person).

Q: How does my account work?

A: During your employer's open enrollment, you will be given the option to sign up for a Flexible Spending Account. This means that you will have money taken out before taxes to spend on medical care or dependent care. Once you have paid out-of-pocket for eligible expenses such as copays, prescriptions, or other medical care, you may submit claims to the flexible spending department, and the money will be reimbursed to you up to your annual election.

Q: How do I get my money back?

A: There are two ways to be reimbursed for flexible spending money:

• You can pay up front for your medical care and submit claims for reimbursement. When the flexible spending department receives these claims, we will normally write you a check for the amount that you submit, up to your annual election. If you have submitted items that are not eligible for reimbursement or items for which Educators or the IRS requires further documentation, these items will be excluded with a note explaining why. Normal turnaround time for a manual claim is seven business days. The flexible spending department prints checks on Tuesdays and Thursdays.
• The second option is to have a Benny™ Card. This card is a special Mastercard® that is linked to your Flexible Spending Account. Think of it as a credit card with a fixed limit—you only have as much money on the card as you have elected for the year. No worry about overdrafts, monthly bills, or finance charges ... use it as a credit card for copays, prescriptions, dental work, hospital bills, and more!

Q: What happens if I do not use all my money?

A: One month prior to the end of your plan year, we will send you a statement in the mail showing how much money you have remaining in your account. This can help you plan for the remainder of the year. If you haven't used all your money by that time, it may be a good time to buy new glasses, restock your medicine cabinet, or get that dental work you've been putting off. The report is also a good indication of what you may want to elect in the next plan year—if you haven't used much at all, that might be a sign to opt for less next time.

If at the end of the plan year you still have money remaining in your account, this money is forfeited back to your employer.

Q: What happens if I retire or quit?

A: You have access to your full election, whether or not you have made all your deposits. However, only services that you received prior to the date you retired or terminated are reimbursable, and claims must be submitted within 90 days of your termination date. You also have the option of signing up for FSA COBRA, which will give you extra time to pick up the rest of your election, if you pay the premiums. If you would like further information on FSA COBRA or the policy on termination dates, please contact your benefits office or call Educators Mutual.

Q: What can I use Flexible Spending dollars for?

A: Flexible spending dollars can be used for most medical care, as established by the IRS. This includes (but is not limited to) copays, prescription drugs, over-the-counter medications, first aid supplies, dental work (with a few exceptions), braces, retainers, vision care (glasses, Lasik, contacts, and even your cleaning supplies), lab work, deductibles for medical expenses, chiropractic care, child birth, maternity care, rehabilitation, and even speech therapy! If you are unsure about what's eligible, feel free to call Educators Mutual to find out what you can claim.

Flexible spending dollars cannot be used for non-employer sponsored insurance premiums, preventive care such as vitamins and supplements, prepayment of services that have not yet been rendered, and cosmetic procedures (such as facelifts, non-reconstructive plastic surgery, teeth whitening, or veneers).

Q: What is the difference between a Flexible Spending HCA and DCA?

A: HCA stands for Health Care Account. This is the Flexible Spending Account you use for medical expenses. When you elect an amount for an HCA, all of the money in the account is available to you from the first day in your plan year, regardless of whether you have deposited it or not. For example, if you elect to have $1,000 taken out of your paycheck over the course of the plan year, that $1,000 is available to you for eligible expenses at any point during the plan year. If you meet your election (use the $1,000) prior to the end of the plan year, the deduction will continue to be taken from your paycheck to "repay" the Flexible Spending HCA. Your employer will set the limit of how much money you can elect to deposit in an HCA.

DCA stands for Dependent Care Account and is a little different. In this case, Educators Mutual can only pay out the amount that you have deposited. For instance, if you take out $100 per month toward dependent care, and then submit a claim for $200 the first month, Educators can pay out what is in your account at the time we receive the claim. We will continue to send you payments for that claim automatically as money is deposited from each pay period. In this example, it would take two deposits to reimburse you for the full claim. Dependent care can be used for child care, elder care, or care of a disabled person who is unable to care for him or herself. The IRS has determined that the limit per year for dependent care is $5,000 per couple or $2,500 for single parents. If both spouses choose to have Dependent Care taken from their checks, their combined deductions cannot exceed the $5,000 cap.

Q: Where do I get my forms?

A: You can use the same form for HCAs and DCAs. This form can be downloaded from our company website or give us a call and we will be happy to mail you one!

Q: How do I keep track of my balance?

A: You are now able to track your Flexible Spending Account online with our new program. Just visit our website. If you have the Benny™ Card, you can go to www.mybenny.com to register and track each and every purchase. Or, you can always give us a call and we can give you information on your balance, date of your last deposit, check dates, and more!

Q: Whose expenses can I claim under a Flexible Spending Account?

A: Flexible Spending Accounts differ from insurance policies. While you may claim unmarried children up to age 26 on your insurance policy, in order to claim someone on a Flexible Spending Account, they must be claimed in that plan year as a dependent on your taxes.

Q: What counts as documentation?

A: When it comes to documentation for doctor, hospital, or other medical visits, you'll need to show three things: service date, procedure, and your portion of the costs. A good example of documentation is the Explanation of Benefits you get from your insurance company—it's all laid out right there! Another example is a statement of services rendered, which most doctors or dentists are able to print out for you at the time of your visit.

Prescriptions and over-the-counter medications are a little different. We'll still need the date of purchase (to show it was in the plan year) and the amount you spent, but we'll also need the name of the drug purchased and whether it is an over-the-counter or prescription medication.

For a dependent care account, we need the dates of service, the amount that you have paid, and a receipt which has the signature of the provider and his or her Tax ID or Social Security Number. Please note that for a provider to be eligible under an FSA, they must be over the age of 18, have a valid SSN or Tax ID Number, and cannot be claimed on your taxes as a dependent.

Just remember — FSA reimbursements are based on the date of service, not the date of payment (except in the case of orthodontics). So if you have large bills toward the end of your plan year, be sure to turn in your claims before the deadline to get reimbursed!

Q: I misjudged my Flexible Spending Account needs—can I change my election during the year?

A: You may only change your election if there is a change in life status; this means birth of a child, death of a spouse or child, loss of a job (or job change), or divorce. The IRS has also determined that if an election is changed, it must follow the change logically (e.g., if you go from full-time to part-time, you generally cannot increase a child care election, because the IRS assumes that working part-time means your children will spend less time with a child care provider). Elections cannot be changed in the event of unexpected expenses, such as serious medical diagnoses; however, the extra medical expenses from those new diagnoses may be claimed on your taxes as a separate line item.

Q: What is my plan year?

A: This varies by employer. However, as a general rule, plan years for higher education institutions typically run from July 1st through June 30th. Most school districts' plan years run from September 1st through August 31st. Still other employers will have their plan years mirror the calendar year. Check with your benefits administrator to find out more.

Q: What are the deadlines for claims submissions?

A: Claims may be submitted at any time during the plan year for reimbursement. However, at the end of the year, you'll have 90 days after the last day of the plan year to get in all of your claims. After that, we can no longer reimburse for the old plan year. Just be sure that all the dates of service that you are claiming are prior to the last day of your plan year.

Q: What is the grace period?

A: In May 2005, the IRS released a new ruling allowing for a 75-day grace period at the end of the plan year. This is an effort to help Flexible Spending Account holders avoid the "Lose It" part of the "Use It or Lose It" rule. In essence, the extension allows account holders to incur expenses for 75 days after the end of the plan year. These expenses can then be paid from the previous plan year's money.

For example, a member has a $50 balance at the end of the plan year (let's say August 31, 2005), and on September 15th, he goes to the dentist and has to pay $120 for fillings. This claim would fall within the grace period, so when the claim is submitted, $50 of it could be reimbursed from the previous plan year, clearing out his election for 2004-2005. The remaining $70 would be paid out of his 2005-2006 election. This grace period also extends the claims submission deadline by 75 days. For example, for a September - August plan year, once the 75-day grace period is up on November 15th, the claims submission deadline is also extended 75 days to February 15th.

While the IRS allows a 75-day grace period, it is not mandatory. The grace period is offered at the employer’s discretion. Please check with your benefits administrator to see if your group offers the grace period.

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Providers

Q: What is the billing process?

A: To avoid claim processing delays, each billing must be completed with all the required information (please see below). We prefer that you send your claims through Electronic Data Interchange (EDI). To send claims electronically, you must preregister by contacting the EDI Specialist at 1-801-262-7476 or 1-800-662-5850 toll free. Upon completion of registration you will receive a unique Educators submitting provider number that will allow you to process our claims electronically.

Q: What information is required on my claim?

A: Please refer to the HCFA 1500 and UB92 standards for information regarding what is required on your form. If you are not using EDI, your office staff must use the HCFA-1500 universal claim forms. Educators will not accept super bills.

Q: How will it be paid?

A: The claim will be paid according to the policyholder's contract and the Educators Table of Allowance. Educators uses the IHC fee schedule for its IHC plans.

Q: What portion is the insured responsible for paying?

A: The insured pays the difference between the allowable charge and the amount Educators pays. If the provider is participating, any balance in excess of the Educators Table of Allowance will be adjusted by the provider. This amount will be outlined on your explanation of payment, under the "Insured Pays" column.

Q: What if I disagree with the way my claim is paid?

A: You may request a review of any adverse claim decision by following the claims review procedure.

Q: Which providers and facilities may I refer my patients to?

A: Educators' insureds will receive maximum benefits, with less out-of-pocket expense when they are referred to participating providers. For those plans using the IHC network, please remember to refer Educators' insureds to IHC participating facilities and specialists. You may access the most up-to-date provider listing on our website.

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