Healthcare Flexible Spending Account
Healthcare Flexible Spending Accounts can be used to pay for IRS eligible expenses found in IRC § 213. Eligible healthcare expenses can include copays, deductibles or coinsurance percentages and out-of-pocket expenses for vision, dental, prescription and medical care.
How does it work?
Employers determine the annual maximum dollar amount employees can elect. Employees who want to participate in the Flexible Spending Accounts must make an annual election by enrolling in the healthcare Flexible Spending Account each year. The annual election is divided by the number of payroll cycles during the plan year to determine a per-pay period amount. This amount is reduced from the employee’s income prior to taxes. When healthcare expenses are incurred, employees will submit a completed claim form along with appropriate supporting documentation for reimbursement. Claims will be processed within 3-5 business days. Participants will be issued a check or, if elected, their reimbursement will be deposited into their bank account.
At the end of the plan year, employees will have a run-out period to request reimbursement only for healthcare expenses incurred during the plan year. Any funds remaining in the account at the end of the run-out period will be forfeited to the employer.