Question: Can our organization's health Flexible Spending Account (FSA) reimburse employees for vitamins?
Answer: Unless your plan imposes additional limits, the answer depends on whether the vitamins are being taken for general health or for a specific medical condition.
Health FSAs can reimburse only those expenses that are defined in the Internal Revenue Code as for "medical care." Vitamins and other dietary supplements taken for general health don't qualify as medical care under the tax code — even if they're recommended by a medical practitioner.
However, if they're recommended to treat an individual diagnosed with a specific medical condition, they may constitute medical care and be reimbursed.
Thus, before reimbursing vitamins or other dietary supplements, your health FSA administrator should obtain from the participant a medical practitioner's written statement that the vitamin or supplement is to treat a specific medical condition.
Let's say a health FSA participant with iron deficiency anemia buys iron supplements recommended by a doctor to treat the condition, those supplements would be eligible for reimbursement from your organization's health FSA as long as the other requirements for reimbursement were met. But multivitamins bought by participants for their own or their children's general health wouldn't qualify.
Prenatal vitamins are another item that's eligible for reimbursement.
Because individual plans may be more restrictive than IRS requirements, you should review your plan document to confirm that vitamin expenses aren't excluded. Most health FSA administrators maintain a table or other records showing how they'll handle different types of expenses. This can streamline administration and demonstrate that the health FSA is consistent in its interpretation of what can be reimbursed.
Under the Employee Retirement Income Security Act, plans are required to maintain reasonable procedures governing benefit claims that ensure consistency in the claims approval process.
Expenses are often organized into three categories:
Vitamins and other "dual purpose" expenses (for example, expenses that could be either for general health purposes or for medical care) would fall into this third category. Contact your health benefits advisor for more information.
Question: For this year, one of our employees elected $2,400 of health Flexible Savings Account (FSA) coverage under our calendar-year cafeteria plan. The FSA is funded solely through employee salary reductions and doesn't provide for carryovers or include a grace period. The employee already incurred medical expenses equal to this amount early in the year and wants to be reimbursed for the expenses now, even though she made health FSA salary reductions of only $600 to date.
Do we have to reimburse all these expenses right away? Or can we limit her to the amount she's already contributed and ask her to resubmit the remaining expenses as additional contributions are made?
Answer: Your employee must be reimbursed for all expenses now, assuming that they're otherwise eligible for reimbursement.
For example, if they're for medical care incurred during the current period of coverage and appropriate substantiation has been provided, the expenses should be reimbursed. This is because IRS requirements for health FSAs include a "uniform coverage" rule under which the maximum amount of reimbursement must be available at all times during the plan year (or other coverage period). The maximum amount can be reduced only for any previous reimbursements for the same period.
Reimbursement is deemed "available" under the uniform coverage rule if claims are paid at least monthly, or when an employee's submitted claims reach a reasonable plan minimum (for example, $50). Thus, reimbursements can't be restricted to the amount of the employee's contributions.
The uniform coverage rule also prohibits accelerating an employee's salary reductions based on health FSA claims submitted or paid.
Note: The uniform coverage rule doesn't apply to plans offered under dependent care assistance programs (DCAPs). So, reimbursements under a DCAP can be limited to the amount that has been contributed, less expenses already reimbursed.
Get in touch today and find out how we can help you meet your objectives.
