Is a Medical Reimbursement Account right for me?

Your Flexible Spending Account can provide a convenient way for you to pay for medical, dental and vision expenses and save valuable tax dollars at the same time. If any of the following apply to you or your family, you are an excellent candidate for a Flexible Spending Account:

• Do you, your spouse or dependents plan to purchase eyeglasses, contact lenses or have corrective laser eye surgery expenses that are not covered by your insurance?
• Do you, your spouse or dependents expect to have any dental or orthodontia expenses that are not fully covered by your insurance?
• Do you, your spouse or dependents have routine medical or drug expenses that are not fully covered by your insurance?

How do I benefit from a Medical Reimbursement Account?

The following comparisons illustrate the difference in paying medical expenses with and without a Medical or Dependent Care Reimbursement Account:

NOTE: Both examples assume the employee is married and claiming two exemptions. As illustrated in the comparison, the individual electing to use a Medical Reimbursement Account had an additional $175 in Net Take-Home Pay. Tax savings may differ depending on income, withholding status, exemptions, and annual medical expenses.

What Expenses Does Medical Reimbursement Cover?

Medical Reimbursement covers expenses that are necessary to treat or alleviate a physical or mental defect or illness. These can be (but are not limited to) clinical, dental, orthodontic, vision, chiropractic or pharmaceutical expenses. (Click on the link at the bottom of the page for the list.)

Note: If you are enrolled in the HSA plan the qualified expenses will be limited to dental, vision and orthodontic expenses only.

Are Over-the-Counter Expenses Covered by A Medical Reimbursement Account?

In some cases Over-the-Counter expenses may be covered:

Over-the-Counter Drug Reimbursement Guidelines

In order to be reimbursed for eligible over-the-counter expenses from your Medical Reimbursement Account, it is important to keep the following things in mind:

• Item must be for the employee, their spouse or eligible dependent.
• Receipt for item must be attached to claim, and must include date of purchase, name of OTC item and amount paid for OTC item.
• Items purchased must be for treatment of a medical condition, illness or injury.
• Items used to maintain general health, or for cosmetic purposes are not allowed.
• Items purchased must be in reasonable amounts, stockpiling is not allowed.

Some OTC items may have a medical purpose, as well as a personal or cosmetic purpose. In order for these items to be covered, they must be accompanied by a letter from a physician stating their medical necessity.

Note: The IRS specifically prohibits "stockpiling" of over-the-counter drugs and medications. Alliance Benefit Group will deny claims with unreasonable amounts of over-the-counter expenses.

What Are Dual Purpose Expenses?

There are some expenses that may be considered cosmetic or general use items that may also serve a medical purpose. If a doctor recommends a service/item that would not normally be considered "medically necessary" to treat or alleviate a specific diagnosable medical condition, it is considered a dual-purpose expense. A written statement from the physician must accompany these expenses. This statement must explain what the condition is, what service/item is recommended and how it will alleviate this condition.

What to Submit With Your Claim?

Supporting documentation is required for all expenses that are submitted for reimbursement. This documentation must be itemized, showing date(s) of service and must clearly illustrate the amount you are responsible for paying. If the expense was covered by insurance, the Explanation of Benefits from your insurance company must be submitted with your claim.

MEDICAL AND DEPENDENT CARE EXPENSE PERSONAL WORKSHEET

Simpson College's Tax Saver 125 Plan allows you to pay uninsured medical and for work related dependent care expenses on a pre-tax basis. If you elect to participate in this plan, you will designate a portion of your salary to be deposited into your reimbursement account(s). The payroll deductions are taken before federal, state and social security taxes are withheld from your salary, thereby reducing your taxable income and increasing your take home pay.

Use this worksheet to help estimate your eligible medical and dependent care expenses.

It is important to plan carefully when making your decision about the amount of salary you elect to contribute to your reimbursement accounts. Per IRS Regulations, any money left unspent in your accounts will be forfeited at the end of the plan year. Here are some important points to keep in mind when you estimate your eligible medical care and/or dependent care expenses:

• The Medical and Dependent Care Reimbursement Accounts are completely separate. Money from the Medical Reimbursement Account cannot be used to pay dependent care expenses or vice versa.
• If you're not sure of the cost for a particular service or medical care item, it's better to use a conservative estimate so you don't risk overestimating.

Medical Reimbursement Account Expenses