Need help using your HRA and FSA accounts? New York Life offers two different accounts to help you pay for health care: a Health Reimbursement Account (HRA) available to those who enroll in the Active Health Option and the Flexible Spending Account (FSA) for Health Care available to everyone. This enewsletter explains what each account can be used for, when and why you would use the accounts, and, importantly, how to use them to your best advantage. 1
The tables below summarize what each account can be used for. This account... Can be used for... The HRA is an account you can use to pay for covered medical expenses. Health Reimbursement Account (HRA) New York Life funds the HRA with consumer dollars. Plus you can earn health incentive dollars when you complete healthy activities throughout the year. If your spouse/domestic partner is covered under the Active Health Option, he or she can also earn incentive dollars for each activity. You decide when and how to use the money in your HRA as long as it s for expenses covered under the Active Health Option. You can use it to pay for current medical expenses or build up a balance for future expenses. Unused funds in your HRA will carry over to the next year. Your HRA can be used only for covered medical expenses; you cannot use this account for prescription drug, dental, vision, hearing, or other types of health care expenses. This account... Can be used for... The FSA for Health Care is an account that lets you set aside money to pay for eligible health care expenses tax-free. Flexible Spending Account (FSA) for Health Care You use the FSA for out-of-pocket medical, prescription drug, dental, vision, and hearing care expenses. The expenses can be for you or your dependents (even if they aren t covered by a company-sponsored plan). Each year at annual enrollment, you decide whether to contribute to the FSA for Health Care for the coming year. Your contributions are deducted from your pay before taxes are withheld and then deposited into your account. You don t pay taxes on your contributions when the money goes into your FSA, or when you take money out of your FSA as reimbursement for eligible expenses. You lose any funds for expenses you do not incur by March 15 of the following year. You have until March 31 of the following year to submit your claims. With the FSA for Health Care, your claims are paid in full up to the amount of your annual contribution, regardless of how much money is in your account at the time. 2
What expenses can I claim from these accounts? You can use the HRA only for eligible medical expenses covered under the Active Health Option. The FSA, on the other hand, can be used for eligible medical, prescription drug, dental, vision, hearing, and other types of health care expenses. If you have an FSA, all the money you contribute for the year must be used before you can access the funds in your HRA. Expenses you can claim HRA FSA Out-of-pocket medical expenses, like deductibles and coinsurance Yes Yes Prescription drug copayments No Yes Dental expenses not covered by your plan No Yes Vision expenses including eye glasses, contact lenses, and supplies No Yes Hearing care No Yes What happens when You have an HRA only If you had an HRA in 2014 and had money left over in your account, it will roll over into 2015. You can use your HRA for eligible medical expenses, including deductibles and copayments you cannot use it for prescription drug, dental, vision, or hearing care expenses. You can use your HRA for current expenses or build a balance to use in the future. Your funds will continue to roll over year after year as long as you work for New York Life and remain in the Active Health Option. 3
You have funds in a 2014 FSA, a 2015 FSA, and an HRA Your FSA funds will always be used before your HRA. New York Life has a legal requirement to choose which account pays first. We chose the FSA because of the use it or lose it feature of that account and the fact that all unused HRA funds roll over. 2014 FSA 2015 FSA HRA Any funds left in your 2014 FSA must be used by March 15 of this year and submitted by March 31 you lose what you don t use. These funds can be used for medical, prescription drug, dental, vision, and hearing care expenses. 2015 FSA funds are used next, for claims from January 1, 2015 through March 15, 2016. Any claims for medical expenses will go through your FSA until all FSA funds have been used. You can access your HRA funds only after you ve used all your FSA funds for the year in which your claim is incurred. Your HRA can be used only for eligible medical expenses under the Active Health Option. Note: If you are no longer enrolled in the Active Health Option but using remaining HRA funds, you will be reimbursed only for those claims incurred before you stopped participating in the Active Health Option. You have funds in a 2015 FSA and an HRA As described above, your FSA funds will always be used before your HRA. 2015 FSA HRA 2015 FSA funds can be used for claims from January 1, 2015 through March 15, 2016. They must be submitted by March 31 you lose what you don t use. Any claims for medical expenses will go through your FSA until all FSA funds have been used. You can access your HRA funds only after you ve used all your FSA funds. Your HRA can be used only for eligible medical expenses under the Active Health Option. If you have unused HRA dollars at the end of the year, the entire balance will roll over to the next year, as long as you work for New York Life and remain in the Active Health Option. 4
Consider how the FSA and HRA can work together in a typical scenario: paying for your child s orthodontia expenses. Remember: if you are in the Active Health Option and you have both an HRA and an FSA for Health Care, the money from your FSA will be used before you can access your HRA funds. It doesn t matter whether you use your PayFlex debit card or submit claims, the money from your FSA will still be used first. Step 1: Paying for care At the time of service, you can either pay for care out-of-pocket or use the PayFlex debit card. If you use your debit card, you will need to submit documentation to confirm your expenses are eligible for reimbursement. If you pay out-of-pocket, you will need to file a claim to be reimbursed. Step 2: Using funds from your FSA If you purposely set aside money in your FSA to cover dental, vision, or other health care expenses, make sure to claim these expenses before claiming any medical expenses. That way, you ll make sure the FSA funds will be available for your nonmedical health care expenses, like your child s orthodontia. This means if you or your family members receive medical care, you will need to wait to claim your medical expenses until after you ve exhausted your FSA funds. Step 3: Using funds from your HRA Once your FSA funds have all been used, you can access your HRA to claim any eligible medical expenses. 5
An example of your accounts in action: Paying for your child s orthodontia Here s how you can coordinate your accounts and claim your expenses: Eric enrolled in family coverage in the Active Health Option. He knew his daughter, Sophia, would need braces in 2015, so he chose the Comprehensive Dental Option. He also elected to contribute $2,500 to the FSA to help pay the additional orthodontia expenses tax-free. With consumer dollars from New York Life and health incentive dollars he earned, Eric has $600 in his HRA. His wife, Rosa, has in-network medical expenses of $1,200. Eric wants to save his FSA for his daughter s braces, so he does not claim Rosa s expenses yet. Sophia s has orthodontia expenses of $5,000. The Comprehensive Dental Option covers orthodontia up to $2,000. Eric submits the Aetna dental Explanation of Benefits (EOB) to his FSA. The EOB shows he owes the provider $3,000. He is reimbursed his full $2,500 FSA balance. Eric can claim up to $600 of Rosa s expenses from his HRA. If he has any additional HRA funds, he can use them to pay for other covered medical expenses during the year or save them for future expenses. Fall of 2014 Early 2015 Mid-2015 Rest of 2015 How do I learn more about my accounts? Both the HRA and FSA are managed through the PayFlex system. Watch your email for further information about the PayFlex system and the PayFlex debit card. Several resources are available for you to learn more about your accounts: Microsite: http://nylbenefits.com Aetna: www.aetnanavigator.com or (877) 440-4708 PayFlex member website: www.aetnanavigator.com and go to Your Accounts and Funds and click Access My Account Why do I need to show documentation? The IRS requires documentation to confirm your expenses are eligible for reimbursement. Even though the PayFlex debit card is able to recognize a doctor s office, for example, the service provided may not be an eligible expense. Requesting documentation ensures the expense is truly eligible for reimbursement as a qualified expense under the IRS code. Keep in mind there are consequences for not responding to requests for documentation including your PayFlex Card being inactivated. There are also potential tax consequences for unsubstantiated claims. 6 January 2015