A New FSAFEDS Option for 2006
Limited Expense Flexible Spending Accounts
For Enrollees with High Deductible Health Plans
with a Health Savings Account
FEHB HDHP/HSA enrollees will have the option of selecting a new limited expense health care flexible savings account (HCFSA) option during the 2006 benefit period! You will have an opportunity in January 2006 to enroll in this new option if you choose to.
Please read the following FAQs to learn more about this exciting new opportunity.
What is a limited expense health care flexible savings account?
A Limited Expense Health Care Flexible Savings Account (LEX HCFSA) is a new money saving option available to employees who are enrolled in a Federal Employees Health Benefits (FEHB) Program high deductible health plan (HDHP) with a health savings account (HSA). Go to www.opm.gov/hsa if you want to learn more about HDHPs and HSAs.
What kind of expenses does the FSAFEDS LEX HCFSA cover?
Expenses are limited to dental and vision care services/products that meet the IRS definition of medical care. Eligible expenses include your out-of-pocket costs for such services/products as:
along with any eligible dental or vision over-the-counter expenses, such as denture care products, contact lens cleaning and soaking solutions, etc.
- Contact lenses
- Vision correction procedures
Dental and vision care costs are the only reimbursable expenses covered under the FSAFEDS LEX HCFSA. Cosmetic services – whether dental or vision related - are not eligible expenses. All of the other expenses normally eligible under a “general” health care flexible spending account are NOT eligible under a LEX HCFSA.
How does a LEX HCFSA save me money?
Normally, someone enrolled in a high deductible health plan with a health savings account cannot also have a general health care flexible spending account. IRS rules prohibit it. However, with a LIMITED expense HCFSA, you can have both accounts. Therefore, you can pay for your eligible out-of-pocket dental and vision care expenses with pre-tax salary dollars. Using pre-tax salary dollars gives you an immediate discount on these expenses that equals the taxes you would otherwise pay on that money. By using a LEX HCFSA, you can preserve the funds in your health savings account to use/save for other purposes.
How much pre-tax salary can I set aside in my LEX HCFSA for dental and vision care expenses?
You can set aside anywhere from a minimum of $250 up to $5,000 per year.
Are all my dependents covered under a LEX HCFSA like they are under a general purpose flexible spending account?
Yes, all your dependents that you claim on your Federal Income Tax return, or with whom you jointly file your taxes.
When can I enroll in a LEX HCFSA?
You can enroll in a LEX HCFSA after the FSAFEDS open season ends and your enrollment in a FEHB HDHP with an HSA becomes effective, generally in January 2006.
How do I enroll in a LEX HCFSA?
Remember, you must be enrolled in a HDHP with an HSA before you can enroll in a LEX HCFSA. Your FEHB HDHP will notify you of your opportunity to enroll in a LEX HCFSA. Your notification will provide you with a toll-free enrollment number to call. You will have 30 calendar days from the date of your notification to make the call and enroll.
If I sign up for a HDHP with an HSA during Open Season, and then enroll in a LEX HCFSA in early 2006, when will my LEX HCFSA coverage become effective?
It will become effective the day after you enroll in the LEX HCFSA. It will not become effective on January 1, as with the other FSAFEDS accounts. Your FEHB HDHP will notify you just as soon as possible, but no later than the end of February 2006.
Can I submit dental/vision expenses I incur starting January 1 for reimbursement from my LEX HCFSA?
It depends on the effective date of your LEX HCFSA. Your LEX HCFSA is not effective retroactively back to January 1, 2006. It is effective prospectively based on when you enroll. However, you will still have until March 15, 2007 to spend the funds in your LEX HCFSA and that should be plenty of time to spend your funds to avoid forfeiture.
I thought I was supposed to spend my HSA funds on dental and vision expenses. Why would I want an FSA account too?
By establishing an LEX HCFSA, you can save money on taxes by using FSA dollars for dental and vision care while preserving your HSA funds for other purposes, including simply saving those funds for the future.
I’m already enrolled in a HDHP with an HSA. When will I be notified?
You will be notified by your FEHB HDHP as soon as possible after December 12, 2005.
Can I just go ahead and call FSAFEDS to enroll right now?
No. The special phone number has not been established yet.
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