Taking some risk out of end-of-year FSA activities
December 2nd, 2006 | by mbhunter |My last visit to the dentist was in October. After a checkup and a crown (no root canal, thank goodness) she wrote up an estimate for the next things to work on.
If you have such estimates in hand, it helps to take some of the risk out of contributing to a flexible spending account (FSA) for out-of-pocket medical and dental expenses, if your employer offers one. The risk is that, unlike health savings accounts, any contributions made to an FSA for a given calendar year will be forfeited if not used. If you know some of the numbers before going into the new year (I have until December 11th to weigh in with my FSA election) then you can plan your allocation better to take full advantage of your pre-tax health-care dollars.
Some other tips for this process:
- If you have good records, review this year’s expenses to estimate next year’s.
- Try to enroll well before the deadline. Usually you have to enroll fresh each year, and phone lines get clogged and websites get sluggish on the last day.
- Review the list of reimbursable expenses. You may be surprised what qualifies. Over-the-counter drugs are a big one for our plan.
- Review your account balance if you’re currently enrolled. There’s still time this year to burn through that balance.
- Do you have an extended deadline? That was new for us this year. We could use our 2005 balance for 2006 expenses during the first few months of 2006. This may let you be a little more sensible with the allocation if it was too big.
- Keep those receipts! And also the packages. For OTC drugs you’ll need proof of purchase to get the reimbursement.
- Check the claims deadline. This is the official date that your last year’s balance turns into a pumpkin.
2 Responses to “Taking some risk out of end-of-year FSA activities”
By Jim Walker on Mar 31, 2007 | Reply
A Cautionary tale about FSA:
To: FSAFEDS, Benefeds, SHPS
claim receipt #removed for privacy
Date March 30, 2007
I appeal your decision to deny any part of my claim.
To wit: $692.31 of my own FSAFEDS funds.
This is my own money that I earned in the employ of SBA disaster assistance office. This is not your money.
I have read the current version of your website which you updated today, March 30, 2007. It now clearly states that employees who left government service prior to the end of 2006 are not eligible for the grace period. This information was not disclosed to me when I signed up for the program nor at the time before my government appointment expired, nor at anytime during the 2006 calendar year. You have obviously updated your website since my enrollment in September 2006. The written materials and website available to me when I signed up for the flexible spending account most definitely did not disclose this loophole that you say allows SHPS to deny my claim on my own money. The fact that you are now publishing this loophole to justify your keeping my money does not justify your denial of my claim.
I refer to page 12 of the 83 page guide to Employees Health Benefits Plans For Certain Temporary Employees. It stated that I would have until March 15, 2007 to incur these expenses. Notifications and disclosures that I was provided at the time of enrollment and during my employment at SBA clearly stated that I had until March 15, 2007 to incur eligible expenses. There is no reference in the document or in any subsequent communication from OPM, Benefeds, FSAFEDS, or SHPS to me of any exceptions in the eligibility period. In voluminous pages of QLE matrices, FEHB guide, website, FAQ’s (available in September 2006) I could find no clear explanation that would lead a reasonable, intelligent person to conclude that shps would be allowed to confiscate my own money unless I failed to submit before May 31,2007, valid claims on eligible services provided before March 15 2007.
Those omissions by these agencies and SHPS are negligent omissions (unless the omissions were fraudulent) . As a result of the negligence these agencies and SHPS violated the fiduciary duty they have to me. I should not be penalized for their negligence and their dereliction of their fiduciary duty to me. The denial of reimbursement of my own funds is not justified. There was no prior disclosure to me that I would lose the right to claim my own funds that I had deposited because of the expiration of my temporary appointment. I have proof that no such disclosure was made. I have a copy of my enrollment application confirmation and acknowledgment, a copy of my enrollment eligibility notice, a copy of the FEHB 2006 guide, copies of emails sent to me by Benefeds and shps during 2006 and copy of an account statement sent to me in 2006. None of these documents reference the loophole you are using to deny me my own funds.
During discussions with claim handlers at SHPS on March 30, 2007 I was given information that indicates that this plan is entirely inappropriate for temporary employees. I was told that expenses occurred after termination of employment were not eligible for reimbursement. This loophole was never disclosed to me. While I was at the SBA on a temporary appointment I was solicited by the Office of Personnel Management through emails to avail myself of this alleged benefit, as I had been employed at the time for a full continuous year. If you review the account you will see that I made very large contributions as soon as I could after enrolling – $1,666,66 per pay period.( Nearly the entire net pay for three periods.) I did this because the program was presented as a way of redirecting my own funds from taxable funds to non taxable health care funds, and that I would have until March 15th to incur the expenses.
The program was improperly explained at the time I signed up. The improper explanations were in writing. If you had properly disclosed the mechanisms of the Flex plan, I would have not signed up, knowing that I could and would be laid off due to completion of the mission with only a weeks notice. You have revised your website subsequently. I could not be expected to monitor your website for updates to your program. You had no right to change the terms of my enrollment and contract without my consent. You had no right to cancel my enrollment without notifying me. I paid the plan in full prior to the termination of my employment. You had no right to terminate my coverage. You did not and my employing office did not notify me that my rights to my own contributed funds under the FSAFEDS were to be terminated The contract that you led me to believe that I had with you was that I would be reimbursed my medical expenses, provided they occurred prior to March 15th 2007 and were claimed prior to May 31st 2007. You have breached our contract. You are ethically required to grant my appeal, pay me the remainder of my claim.
Because of my experience, I realize now that this plan was not only inappropriate for me personally, but it would be inappropriate for any temporary employee.
It is a breach of fiduciary duty for health plan administrators to promote this type of plan and enroll employees without clearly explaining the loopholes and especially inappropriate to encourage temporary employees to enroll in such a bad faith plan. I am curious to know, and I have a right to know, according to the Freedom of Information Act , how many temporary federal employees have had their legitimate health care expenditure denied reimbursement due to these previously undisclosed loopholes.
You have breached our contract. You are ethically required to grant my appeal, pay me the remainder of my claim, $692.31
You are also required by ethics to research any other claim denials to other enrollees that were denied for the same or similar reasons, and to make them whole, as well.
Sincerely,
James B. Walker
Former and future SBA Disaster loan officer
Home: Roseville, CA 95747
attachments to faxed letter:
page 12 of FEHB 2006 guide from OPM
RI 70-8 revised November 2005 83 pages-
Health Benefits election form – 5 pages From2809 Revised October 2004
FSAFEDS Claim form instructions
September 12, 2006 letter from SBA announcing my FEHB eligibility.
7 pages of Q.L.E. Enrollment change Matrices downloaded from FEHB webpages – Although the matrices list approximately 112 events none of them clearly address this situation. None of the Q.L.E. examples suggest that coverage fully paid for in advance could be retroactively uncovered.
FSAFEDS Statement undated but generated approximately 10/27/2006 affirming twice that I have until 3-15-2007 to incur eligible expenses.