MYTH:
The date of payment determines the acceptable plan year.
FACT:
NO, the date of service is the key, not when you pay. You do pay first, but the appropriate plan year is determined by the date of service.
MYTH:
People don’t participate because of the “Use it or Lose “ Rule.
FACT:
Firstly, the “Use it or Lose it” rule only really affects participants in the Unreimbursed Healthcare account. For the Child/Dependent Care account, whenever there is a change of either coverage (for example, switching programs or changing hours) or a change of costs (for example, fees or hourly rates) you can change your election -- so unless you forget to change "use it or lose it" will not be a factor.
Recently, the IRS has allowed a Grace Period which gives participants an extra 2 months and 15 days after the Plan Year ends to submit cliams for services dated during the Grace Period. So with 14 months and 15 days, the "use it or lose it" is more manageable.
Most people do not worry about this rule. They plan ahead (see the Enrollment Worksheets) and are conservative by setting aside money for services they are more sure they will use during the plan year or during the grace period.
MYTH:
I have until the Plan Year ends to submit my claims.
FACT:
No one should run out of time. Now there is a "Grace Period" which allows services up to 2 months and 15 days after the Plan Year End to be submitted; thus participants have 14 months and 15 days to use their annual elections.
Furthermore, there is an "Extended Processing" of at least 3 months after the Plan Year End to submit the paperwork for the previous Plan Year. If anyone needs more time beyond the "Extended Processing" they can simply request more time to complete the paperwork on or before the Extended Processing deadline.
MYTH:
My company has a Health Spending Account (HSA) so we cannot have a Flexible Spending Account (FSA).
FACT:
The IRS allows a "Limited Purpose FSA" to be coordinated with the HSA. The Limited Purpose FSA basically includes amounts which exceed those allowed for the HSA (you use the HSA first, but if your expenses exceed the HSA, then the FSA can be used) as well as for expenses not covered by health insurance (vision care, dental care, health clubs when prescribed, over-the-counter drugs, etc.)
MYTH:
There is too much paperwork.
FACT:
A normal claim should take about 10-15 minutes to complete, copy, and submit. (If you are submitting the claim for an entire plan year, then it might take a longer.) Each item need not be listed on the claim form, rather the form itself can summarize a period (e.g. Service Dates: Jan 2005 until June 2005) with the detail bill showing the specific details of each visit.
MYTH:
Use of credit or debit cards can take the place of claims forms.
FACT:
The IRS has specifically indicated that use of a debit or credit card does not change the need for claims substantiation which means the participant must still proof that the services where during the plan year (or grace period), that the amounts are allowed expenses, and that the amounts claimed are out-of-pocket, paid expenses which have not yet been reimbursed.
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