FSA and LPF Account Rules
To view enrollment guides for all account types, please visit the Forms page. Scroll down to Plan Guides and select a plan to view specific plan details.
Important information to know about your accounts:
- Participants may claim and be paid out their entire annual election at any time.
- Every expense must be substantiated. Participants must be able to provide receipts, statements, or bills for all expenses if substantiation is requested. Documents must include the date, amount, and description of the expense or service.
- Only eligible expenses can be reimbursed. Medical expenses are defined by IRS rules. Expenses generally include items and services for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body. See IRS Publication 502.
- Only out-of-pocket medical expenses are eligible for reimbursement. Medical expenses covered by insurance or any other plan or program are not eligible for reimbursement.
- Expenses for general health, personal use or cosmetic surgery are not eligible for reimbursement. See IRS Publication 502.
- Medical expenses reimbursed under the health (medical) FSA may not be used to claim a federal income tax deduction.
- Employees contributing to a HSA may only participate in a Limited Purpose FSA, an LPF, not a “general” health FSA. An LPF can only be used to pay or reimburse out-of-pocket dental and vision expenses.
Can an employee make more than one max election if they change employers?
Yes. If an employee with Company A made an FSA election for the full IRS maximum ($3,050 in 2023) and subsequently terminates and moves to Company B, that participant can then elect the full IRS maximum with the new employer, regardless of how much was spent from the account with Company A.
If the first employer has a twelve-month plan year, then the employer can contribute and claim the full annual maximum. For this example, the employee then terminates with that employer and starts with a new employer that also has a twelve-month plan year.
Even though the employee starts mid-year and participated in a previous health FSA they can elect, contribute, and claim the total annual maximum with their new employer.
Can I change my LPF to an FSA?
Certain LPF accounts can convert to a full FSA plan upon the participant meeting their deductible on their health insurance plan. The basics of the plan setup is that the LPF acts as a normal LPF up until the participant submits a form to RMR along with their EOB (Explanation of Benefits) stating that they have met the deductible. At that time, their LPF can now be converted to cover the full FSA expenses, not just vision and dental, for the remaining balance.
RMR sets up and lists converted LPFs as an LP2 plan. This change occurs on a per employer basis and participants will need to check with their HR department if they are eligible.
See this article for an overview of an Explanation of Benefits (EOB).
Can I change my election?
For more information on changing your election, please refer to our Permitted Election Changes article.