LIMITED-PURPOSE HEALTH FSA
Employers who offer health FSAs and plan to offer HSAs will need to review all of their plan documents and decide how or if these plans will coordinate.
For example, if an employer offers a general-purpose health FSA and wants to provide employees with access to HSAs, it should amend the health FSA plan document to restrict eligibility to employees who do not contribute to HSAs. Or, the employer might want to amend their current general purpose health FSA to a limited purpose health FSA (dental, vision, and preventive care benefits only). If the plan document is amended, all employees can continue to enjoy the benefits of a health FSA, on a limited basis.
Communication materials will need to be reviewed to see what changes may be required or advisable. For example, if the employer who currently offers a general-purpose health FSA decides to offer access to HSAs but does not want to redesign the health FSA (e.g., to limit the health FSA to pay only dental, vision, and preventive care benefits), then the employer should clearly explain to the employees they will not be eligible to make contributions to an HSA if they are covered under the health FSA. The employer will want to explain to the employees that if they elect coverage under the employer’s general-purpose health FSA, their covered spouses will also be unable to make HSA contributions.
WHAT EXPENSES CAN BE REIMBURSED UNDER A LIMITED PURPOSE HEALTH FSA
Following is a list of some expenses normally reimbursable under a Limited-Purpose Non-reimbursed Medical Spending Account, when incurred during the Plan year, by the employee, the employee’s spouse, and/or the employee’s dependent(s).
• Dental implants
• Periodontal services
• Occlusal guards to prevent teeth grinding
• Orthodontia (as services are incurred – not when paid)
• Contacts (including materials and equipment needed for using lenses, such as saline solution and enzyme cleaner)
• Laser eye surgery
• Prescription sunglasses
Preventive Care Preventive Care does not include any service intended to treat an existing condition.
• Periodic health exams, including related lab and x-ray services
• Routine prenatal and well child care exams
• Immunizations, child or adult
• Flu Shots
• Tobacco cessation programs
• Obesity weight-loss programs
• Diagnostic Screening services
• Medical monitoring and testing devices (blood pressure monitor, glucose test kit, etc.)
Once the employee satisfies the deductible for the high deductible health plan, the employee may be reimbursed for any medical expense(s) incurred, by the employee, the spouse, and/or the dependent(s), during the remainder of the Plan year.
To be eligible for reimbursement, the expense(s) must not have been reimbursed, and will not be reimbursed, under any other health plan coverage. These expenses can not be deducted or taken as tax credits on your personal federal and state income tax returns for any year.