Health Reimbursement Account Rules
The easiest way to boil down the Health Reimbursement Account rules as far as eligible expenses is by asking two questions:
1. Is the product or service designed to treat rather than just prevent an actual illness or medical issue?
2. Does your doctor agree with this assessment and is he or she actually recommending the product or service even if no prescription is needed?
Thus the obvious items and services that are covered as eligible expenses for your Health Reimbursement Account are prescription medications, over the counter medications that your doctor tells you to buy for a specific problem, devices you need because of an injury or persistent medical condition, etc. And when we mention doctors we are also including dentists, psychologists, and other doctors who treat medical diagnoses. If the answer to one of the above questions is no, or a little more gray than black and white, make sure you get advice from your plan administrator about your specific Health Reimbursement Account rules.
These questions also point to what the limits to your Health Reimbursement Account are, and some of these limits have become stronger over the past few years. For example, some flexible spending accounts that covered health spending used to allow you to get certain nutrients and supplements that would probably be considered preventative. And you also used to be able to buy enough over the counter medication to cover the next few times you were ill. And in general, Health Reimbursement Accounts used to have a much wider variety of over the counter medications and items on their eligible expenses list. (If you had a Health Reimbursement Account a few years back and now are getting one again after a few years, make sure to know all the new restrictions that will be in place.
We dedicated a whole page to the eligible expenses for each Health Reimbursement Account, so we will not repeat that advice here. The other Health Reimbursement Account not mentioned there or above include:
1. As obvious as it seems, make sure that the items you are buying or services you are getting are for a household member who qualifies for your Health Reimbursement Account plan. There may be different rules for different companies, so besides the obvious like minor children who qualify as dependents, you might want to check.
2. Be very aware of the use it or lose it rule, meaning that any money you set aside for your Health Reimbursement Account that is not used by the end of the plan year may be forfeited. While dependent care expenses may be easier to calculate and predict, medical expenses are a little more challenging. Do not put too much aside.
3. Be aware of grace periods at the end of the plan year as far as when you need to submit expenses by. Try not to cut it close and make sure all expenses are in in a form and with all the information the Health Reimbursement Account requires.
4. Know what information each receipt and request for reimbursement will need. The obvious of course is the date you purchased the item or received the service and how much you paid. Less obvious may be information about the provider or the diagnosis. Know everything you need to send in.
5. Make sure you know what might qualify as a life event that would allow you to change or terminate your Health Reimbursement Account. For example, changing jobs, the birth of a child, divorce, or change in employment status of your spouse may allow you to change things if you want.
These are the major Health Reimbursement Account rules that you should know, but there may be subtle other guidelines and limits that could affect you. It is best to go over your own needs with a plan administrator, at least in the first year you take out a Health Reimbursement Account