Typical Problems and Best Solutions to a Better Understanding of FSAs

The first of the calendar year is a popular time for Flexible Spending Account (FSA) renewals and enrollments. However, as an HR professional, I have found employees do not always have an understanding of what an FSA is and the benefits of an FSA enrollment.  Nevertheless, let’s explore a few of the typical problems and questions that come up during FSA renewals and enrollments.

What is a Flexible Spending Account or FSA?

An FSA is a an account that holds pre-tax deductions that will allow you to set aside a set dollar amount each pay period for dependent care and medical expenses.  Upon receiving a medical or dependent care expense, a receipt should be submitted to the FSA administrator.  The administrator is determined by the employer. The FSA administrator will ensure expenses submitted for reimbursement are allowable by reviewing receipts submitted. Upon approval, the administrator will send a reimbursement for the expense.

Medical FSA vs. Dependent Care FSA

As you begin to educate yourself on FSAs take the time to review the types of expense you may have (i.e. expenses focused on medical or dependent care).  Now, let’s address the types of expenses that an FSA can be used for. A medical FSA account allows for medical expenses such as co-payments, prescription, glasses, and contact lenses. A dependent care FSA allows for dependent care expenses such as child care.  You may elect to have a either a medical FSA or a dependent care FSA or you may have a need for both.   Lastly, for a complete list of allowable expenses you should consult with your HR department as well your plan FSA administrator.

Claim submission – Check vs. Direct Deposit vs. Medical Reimbursement Card

Depending on how your FSA is administered, reimbursement from your FSA administrator can be received using three (3) options: check, direct deposit, and/or medical reimbursement card. Please note that each expense is subject to review by the FSA administrator and could require proof should an expense be considered “questionable”.

1. Let’s start with the check option. Under this option, a reimbursement request is submitted to the FSA administrator and a check is mailed to you home.
2. Should direct deposit be selected, a direct deposit form is completed and submitted to the FSA administrator.  Upon approval of expenses from the administrator the dollar amount submitted is sent to your bank account.
3. Lastly, and this option is only allowable for medical expenses is a medical reimbursement card. Should you have a medical expense such a prescription that you would like to pay for at your local pharmacy, you would “swipe” this card like a debit card. There is no reimbursement submission required here.

Here I have provided a few basics on FSAs but to receive a full understanding of your FSA plan, consult your HR representative as well as your plan administrator.