Does a Health FSA affect my tax deductions?


Yes, the IRS allows you to pay for eligible health care expenses, including those expenses that are not reimbursed under an insurance plan, with tax-free dollars through a Health FSA. When filing your tax return, you can only claim health care expenses exceeding 7.5 percent of your adjusted gross income. With a Health FSA, a member is able to receive tax savings immediately, when the services are rendered as opposed to waiting until tax returns are filed.


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Does my receipt need to contain certain information to be accepted?


The IRS requires proper documentation for all expenses. Your request for reimbursement must include an itemized receipt and an explanation of benefits showing the amount of insurance payment, if applicable. A receipt alone is not proper documentation. Receipts should clearly identify:

  • the service or product that was purchased
  • the date of the service or sale
  • the amount of the expense


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Does an employee have to participate in a health insurance plan to contribute to a Health FSA?


No, all qualified medical expenses are eligible for reimbursement under a spending account regardless of an employee's participation in a health or dental insurance plan.


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Can I receive the full amount of my election in the Health FSA at anytime?


Yes, you can receive the full amount of the election in the Health Care Spending Account at the time the expenses are incurred even if the payroll deductions have not been taken.


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Can I be reimbursed for over-the counter medications from my Health FSA?


Yes, but only if submitted with a doctor's written prescription. Due to the Patient Protection and Affordable Care Act, as of January 1, 2011, all over-the-counter medications require a doctor's written prescription to be considered an eligible Health FSA expense.


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Who can receive reimbursement for?


Flex Spending Accounts provide reimbursements for qualified medical expense for you, your spouse and any dependents as defined in IRS Code Section 152.


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What can I do to ensure that I don't lose money in my account?


To insure that you will not lose money, base your contribution on last year's expenses. Budget conservatively, but do not over look all those little incidental expenses like copays, optical care, and deductibles that add up. And remember, if a small amount is forfeited, it's often outweighed by the tax savings and increased spending money you will net.


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How do I file for reimbursement?

  • If you are a Blue Cross and Blue Shield of Alabama health plan subscriber, your out of pocket expenses for medical services will automatically apply to your Health FSA.
  • If you have secondary coverage with another carrier you should contact Customer Service to document this information on your account. Under the IRS guidelines all medical plans must pay before Health FSA funds can be used. You will be required to file a Request for Reimbursement Form, which must include all required documentation as well as the other carrier's Claims Processed Report (CPR).
  • The money you have paid out of pocket is reimbursed to you from your account. You may elect to have it deposited directly into your checking or savings account. You may begin the direct deposit service at any time.


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Can the Health FSA reimburse my doctor, hospital or pharmacy directly?


Payments cannot be made directly to providers. Federal regulations state all reimbursements must go to the member. However, provisions have been made to allow the use of debit cards. Your employer determines if debit cards are available under your plan.


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Can I claim my insurance premium or my spouse's insurance premium through my FSA?


No, premiums are not an eligible Health FSA expense. However, premiums for programs offered by an employer may be a separate pre-tax deduction through your cafeteria plan.


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If I leave my job, may I still participate in the Health FSA program?


Yes, you may continue your Health FSA under COBRA. Your employer will notify you if you qualify to continue your coverage and you will continue to make contributions directly to the employer for your Health FSA, but on an after-tax basis.


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