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Flexible Benefits FAQs

Flexible Benefits FAQs

Get answers to questions about your flexible benefit plan by selecting a category below.

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What expenses are typically not eligible?

Expenses you incur for your general well-being, that are not primary for medical care, are not reimbursable. Over-the-counter (OTC) drugs and medicines will be considered ineligible expenses unless you have a Note of Medical Necessity (NMN) or a prescription from your physician. Examples include nutritional supplements, illegal operations and treatment, health club dues and cosmetic surgery (unless medically necessary). For a complete list of ineligible items, refer to Publication 502 on irs.gov.

Additionally, expenses may not be incurred before your program is effective, and may not be reimbursable through your health insurance.

Are over-the-counter (OTC) drugs eligible?

Effective January 1, 2011, over-the-counter (OTC) drugs and medicines will be considered ineligible expenses unless you have a Note of Medical Necessity (NMN) or a prescription from your physician. Healthcare debit cards cannot be used to purchase OTC drugs and medicines. If a healthcare debit card is used to pay for these items after January 1, 2011, the transaction will be denied at the point of sale. In this case, you will need to pay for the expense out-of-pocket and submit a claim, along with an NMN or a prescription, to be reimbursed.

What is a Medical Determination Form?

The IRS requires that expenses for medical procedures and services, and all OTC drugs be medically necessary in order to be eligible for reimbursement. This means they must be primarily to alleviate or prevent physical or mental defect or illness.

Some services or drugs may have dual purpose. For example, a procedure may generally be deemed cosmetic in nature but may also be used to treat a medical condition. In order to show that such a treatment is medically necessary, the IRS requires you submit a note from your provider, or a Medical Determination Form explaining your diagnosis and the recommendation for treatment.

For a list of services and OTC drugs requiring a Medical Determination Form, see the eligible expenses list. If your expense requires a letter for reimbursement, download the Medical Determination Form, have your provider complete the form, and submit it with your claim to SHDR.

Does my doctor need to recommend a drug or a treatment for the item or service to be reimbursable?

In some cases, prescription drugs and medical services must be prescribed as medically necessary by your health care provider for those items to be reimbursable. A note from your provider listing the diagnosis of the medical condition and the treatment recommendation, called a Medical Determination Form must be submitted with your claim. Over-the-counter drugs also require a Note of Medical Necessity (NMN) from your provider.


Are over-the-counter (OTC) drugs eligible?

Medically necessary OTC drugs may be considered eligible by the IRS and may be eligible for reimbursement under your plan. These expenses will require a Medical Determination Form from your health care provider listing the diagnosis of the medical condition and the recommendation of the OTC drug. Check the eligible expenses list for more details about reimbursement rules.

Does my doctor need to recommend a drug or treatment for it to be reimbursable?

In some cases, the IRS requires that a drug or treatment be medically necessary in order to be eligible for reimbursement. Over-the-counter (OTC) drugs also require a Note of Medical Necessity (NMN) from your provider.

You may be required to submit a Medical Determination Form from your provider listing the diagnosis of the medical condition and the recommendation of the treatment with your claim in order to receive reimbursement. Some OTC items also require a letter from your provider.

What is a Medical Determination Form?

The IRS requires that expenses for medical procedures and services and OTC drugs be medically necessary in order to be eligible for reimbursement from your HRA. This means they must be primarily to alleviate or prevent physical or mental defect or illness.

Some services or drugs may have dual purpose. For example, a procedure may generally be deemed cosmetic in nature but may also be used to treat a medical condition. In order to show that such a treatment is medically necessary, the IRS requires you submit a note from your provider, or a Medical Determination Form explaining your diagnosis and the recommendation for treatment.


What can HSA funds be used to cover?

HSA distributions are tax-free if used for IRS qualified health care expenses. Eligible health care expenses include services and items such as the following:

  • Doctor's office visits
  • Over-the-counter (OTC) medications if a doctor writes a prescription or provides a Note of Medical Necessity (NMN)
  • Coinsurance
  • Services not covered by insurance such as LASIK eye surgery

For a more detailed list refer Internal Revenue Code Section 213(d) on irs.gov.

Nonqualified distributions will be taxed as part of gross income and will incur a 20% penalty. After age 65, the 20% penalty is dropped, though the distribution is still treated as taxable income.

How much can I contribute each year to my HSA?

The 2013 maximum annual contribution is $3,250 for single coverage and $6,450 for family coverage. These amounts will be updated each year to account for inflation. Rollover amounts from previous years and/or Archer medical savings accounts (MSA) or another HSA do not count toward the maximum annual contribution. In 2013, individuals who are age 55 and older and not enrolled in Medicare (Part A or Part B) can contribute an additional $1,000.

The 2014 maximum annual contribution is $3,300 for single coverage and $6,550 for family coverage. In 2014, individuals who are age 55 or older and not yet enrolled in Medicare (Part A or Part B) can contribute an additional $1,000.

Can I make contributions if I am not enrolled in a QHDHP for the entire year?

Yes. Full year statutory contribution limits are permissible, but the HSA owner must maintain eligibility throughout the "testing period," which runs from the last month of the initial eligibility year through the end of the 12-month period following that month.

In 2013, the maximum annual contributions are $3,250 for single coverage and $6,450 for family coverage. The 2014 limits are $3,300 for single coverage and $6,550 for family coverage.

If HSA owners are not eligible for this entire testing period, they must include in their gross income the contributions made for the months when they were not otherwise qualified. This amount will also be subject to a 10 percent penalty. The tax and penalty do not apply if the HSA owner is no longer HSA-eligible because of death or disability

If one or both spouses have family coverage, how is the contribution limit computed?

If either spouse has family coverage under a QHDHP, both are treated as having family coverage. The 2013 maximum statutory contribution limit is $6,450 for family coverage. Whether each spouse opens an individual account or one spouse opens an account, the collective total must not exceed the family maximum. The 2014 maximum annual contribution is $3,300 for single coverage and $6,550 for family coverage.


How will the card work at discount stores and supermarkets?

First, confirm that the retailer can accept FSA cards by reviewing our participating retailer list.

To find a retailer who can accept your Benefit Access Card, review the IIAS Merchant List.

Then, follow this process:

  • Take prescriptions, vision products and other health care purchases to the register at checkout to let the clerk ring them up.
  • Present your card or swipe it for payment.
  • If the card swipe transaction is approved (e.g., there are sufficient funds in the account and at least some of the products are FSA-eligible), the amount of the FSA-eligible purchases will be deducted from your account balance. The clerk will then ask for another form of payment for the non-FSA-eligible items.
  • If the card swipe transaction is declined, the clerk will ask for another form of payment for the total amount of the purchase. (File a claim for reimbursement for these expenses).
  • The receipt will identify the FSA-eligible items and may also show a subtotal of the FSA-eligible purchases.
  • In most cases, you will not receive requests for receipts for FSA-eligible purchases made in participating discount stores or supermarkets.
How do I create a PIN for my SHDR Benefits Access Card?
  • Please call 1-866-898-9795.
  • The automated system will walk you through the prompt to create your own self-selected PIN for your SHDR Benefits Access Card.
Am I required to use a PIN to access funds in my account?

No, you can continue to use your SHDR Benefits Access Card as you always have – no change required, by simply swiping the card and providing a signature.

I have more than one card; does each card have its own PIN?

No, the PIN is the same for all cards issued to you. If you choose this option, make sure other family members are aware of the PIN. Alternatively, other family members can continue to pay using the signature process.

If I don’t know my PIN or have not yet selected one can I still use my card?

Yes, simply let the merchant know that you wish to pay using the signature process (credit) and they will direct you accordingly.

When I swipe my SHDR Benefits Access Card, what options do I have to
complete the payment?
  • Once you swipe your card at the point of purchase, choose “Credit” or “Debit”
    on the keypad.
  • Choosing “Credit” will require only your signature.
  • Choosing “Debit” will require you to enter your PIN.
Will I be able to receive cash back or access my accounts via ATM with this
new PIN option?

No, PINs will only allow you to pay for eligible goods and services as they do today. Cash back and ATM transactions will not be allowed.

Keep in mind, the use of a PIN is not required to access your funds via the SHDR Benefits Access Card. You can continue to use your SHDR Benefits Access Card as you always have by simply swiping your card and providing a signature.

If you have questions about creating a PIN or need additional information, you may speak to SHDR client service at 1-800-930-2441 between 8 a.m. and 6 p.m. ET, Monday through Friday.