Employee Benefits
Flexible Benefits - Medical Reimbursement Account
What is a Medical Reimbursement Account
A Medical Reimbursement Account allows you to set aside part of your salary each pay period on a pre-tax basis to pay for the out-of-pocket medical, dental, and vision care expenses not covered by your health benefits plan.
Eligible Expenses
The following is a partial list of expenses that are reimbursable tax-free with a Medical Flexible Reimbursement Account (FRA).
- Acupuncture
- Ambulance service
- Birth control pills
- Acupuncture
- Ambulance service
- Birth control pills
- Chiropractic care
- Contact lenses (corrective)*
- Dental fees*
- Diagnostic tests
- Doctors ’ fees
- Drug addiction/alcoholism treatment
- Drugs (prescription and some over-the-counter nonprescription only*)
- Experimental medical treatment
- Eyeglasses (corrective)*
- Guide dogs
- Hearing aids & exams
- Injections and Vaccinations
- In vitro fertilization
- Nursing services*
- Optometrist fees
- Orthodontic treatment*
- Prescription drugs to alleviate nicotine withdrawal symptoms
- Smoking cessation programs/treatments
- Surgery*
- Transportation for local medical care
- Wheelchairs
- X-rays
- Under the CommonHealth program - fees for health and bone density screenings and flu shots
*To be eligible for reimbursement, some treatments, prescription drugs or services deemed cosmetic in nature require written proof of medical necessity from your health care provider. For a list of eligible over-the-counter drugs, visit the FBMC Web site at www.myFBMC.com.
Note: Unused funds designated for Medical FRAs cannot be refunded to you. Please verify with your healthcare provider (prior to the end of the Open Enrollment period) that you are a suitable candidate for any surgical procedure before committing the money to your FRA.
Ineligible Expenses
- Insurance premiums
- Vision warranties and service contracts
- Vitamins and nutritional supplements
- Some over-the-counter drugs and medical supplies (even if prescribed by your healthcare provider)
- Health or fitness club membership fees
- Cosmetic surgery not deemed medically necessary to alleviate, mitigate or prevent a medical condition
FRA vs. Claiming Expenses On A Form 1040
Unless your itemized medical expenses exceed 7.5% of your adjusted gross income, you cannot claim them on your IRS Form 1040. But you can save taxes by paying for your uninsured, out-of-pocket medical expenses through a tax-free Medical Expense FRA.
Reimbursement Account Rules:
Because spending accounts offer tax advantages, the IRS places certain restrictions on these accounts.
- You cannot transfer money between accounts.
- You cannot change the annual amounts without an approved qualifying mid-year event (see Making Changes Outside of Open Enrollment).
- You must use the full amount in the account each plan year, or lose it. The "Use it or lose it" rule means if you don’t use all of the money in your account, you cannot get a refund or roll it over into the next plan year. For this reason, it’s important that you set up your annual Flexible Reimbursement Accounts only for predictable expenses to be incurred during the plan year.
Who is Eligible to Participate in the Medical FRA?
All employees who are eligible for the State Health Benefits Program may participate. Enrollment in the State Health Benefits Program is not required.
Expense Reimbursement
Your Medical Expense FRA may be used to reimburse eligible expenses that you, your spouse, your qualifying child or your qualifying relative incur during the plan year. See Pages 7 and 8 in the Flexible Benefits Sourcebook.
How A Reimbursement Account Works
- First, estimate how much money you’ll spend from during the plan year for expenses which qualify for reimbursement. Your contribution to the account must be within the minimum and maximum amounts allowed for each account. (See Minimum and Maximum Contributions).
- Once you’ve enrolled in an account, each pay period the amount you allocate to your Reimbursement Account is taken out of your pay before taxes are calculated and withheld. The money you set aside for your account is tax-free.
- During the plan year, when you pay for eligible expenses, you will be reimbursed for them with the tax-free money you have set aside in your Reimbursement Account by simply filing a Reimbursement Request Form with the supporting documentation.
Each year you must re-enroll in the account, even if you wish your total annual contribution for the new plan year to remain the same.
Enrollment:
- Enroll during the Open Enrollment period.
- Enroll when you are first eligible to participate.
- Change your election outside of Open Enrollment, if the change is consistent with the qualifying mid-year event. (See Making Changes Outside of Open Enrollment).
For plan year minimum and maximum annual deposits to a Medical FRA, see Minimum and Maximum Contributions.
New Employee Enrollment
New employees who wish to participate in a Medical Reimbursement Account must enroll within 31 days of the date they were hired. Elections received within the 31-day election period will be effective the first of the following month. If you do not enroll during this initial eligibility period, you must wait until the next Open Enrollment or until you experience a qualifying mid-year event that would allow enrollment into a Medical Reimbursement Account.
Important: Each year you must re-enroll in the account, even if you wish your total annual contribution for the new plan year to remain the same.
For plan year minimum and maximum annual deposits to a Medical FRA, see Minimum and Maximum Contributions.
How To Enroll:
To enroll or make changes, complete the Flexible Reimbursement Account Election Form , the FRA section of the Health Benefits Enrollment Form for Active Employees, or use EmployeeDirect, the Commonwealth's health benefits enrollment system.
Changes done via Employee Direct will be confirmed in one of two ways. EmployeeDirect either approves your request right away with a link to your updated Health Benefits Profile, or it tells you and your Benefits Administrator that your request needs additional review. Before updating your Health Benefits Profile, your Benefits Administrator could ask you for supporting documents.
Fringe Benefits Management Company sends each employee a confirmation letter for elections and changes. Employees should review the letter to verify the type and amount of the election(s) and any applicable changes
Period of Coverage:
If you enroll in a Reimbursement Account during Open Enrollment, your period of coverage is the same as the plan year. If you enroll after the plan year begins, your period of coverage begins on the effective date of your coverage (which will always be the first of the month) and ends on the last day of the plan year.
If you terminate employment or become ineligible to participate in the program, your Medical FRA will end the last day of the month unless you elect to extend participation in the Medical Reimbursement Account through the end of the plan year. See your agency’s Benesfits Administrator for more information.
If you stop your participation in a Medical FRA due to a qualifying mid-year event, the account will end the last day of the month following receipt of a completed election form.
Filing A Reimbursement Request
After you enroll, you will receive reimbursement request forms to use when submitting expenses for reimbursement. You may submit a form anytime you incur reimbursable expenses during the plan year and up to three months after the end of the plan year.
For Medical Reimbursement Accounts, you will be reimbursed from your account for the total amount of the qualifying expenses claimed, up to your plan year election (as long as the expenses were incurred during your period of coverage).
Reimbursement checks for the account are generated on a daily basis and if you prefer, you may have your claim reimbursement checks sent to your bank account by direct deposit. You will have to submit a completed Direct Deposit application to the FBMC office. The Direct Deposit form can be found on this web site under Publications and Forms or obtained by calling the FBMC’s claim office at 1-800-342-8017.