FlexBank Administrators continually strives to offer its clients the most comprehensive benefits services possible. This includes the availability of a health care Debit Card for your FSA participants. This is a very positive feature for the employees, but there are a few things that you, the employer, should be aware of as well.
The Good News:
- Convenience, convenience, convenience! Immediate availability of funds. Employees do not have to pay for expenses “up front” for their services and wait to get reimbursed.
- There are many instances where the participant does not need to submit receipts. These are typically flat dollar co-pays at doctor offices and most prescription medications.
- Increased participation means increased tax savings to the employee and to the employer.
- FlexBank handles most of the repayment issues for ineligible card use. If an expense is not eligible, the participant must write a check and “pay back” his health care FSA. The employer is only involved when a card has been shut off and funds must be recouped through payroll withholding.
The Other News:
- There is an additional $1 charge per month for each participant.
- FlexBank is not able to reimburse participants if they walk into our office for an on the spot reimbursement.
- Bank reconciliation can be a challenge. A weekly total of all individual swipes for all participants will show up on the bank statement vs. one single amount like a check.
- Increased funding to the flex account is required. Employers must fund an additional 5% of the total annual amount elected by participants for potential claims so that it is available for real time debit card purchases.
- Documentation will still need to be submitted in some instances. The employee has a limited time frame (set by the IRS) in which to submit valid paperwork for their card usage. If the paperwork is not received in the allotted time frame, the employee’s debit card will be turned off and other measures must be used to recover the funds. Without supporting documentation, all card usage is assumed to be invalid and therefore must be repaid to the flex bank account. The IRS requires paper documentation for all major medical, dental and vision expenses.
- FlexBank attempts to obtain repayment from participants for ineligible or unsubstantiated expenses. If we are unable to do so, it is your responsibility to assist in the recovery. This is generally accomplished via payroll deduction. This can be a challenge if the employee has terminated employment.
The challenge typically lies with employee expectation of the card – that the card knows what they are buying and no receipts are required. We suggest having a meeting with the electing employees so that FlexBank can explain the process.
Understanding the process is key to success of the program.