Limited-Purpose Medical
Reimbursement Account
You can use a limited-purpose medical reimbursement account to cover
dental and vision expenses considered tax-deductible
by the IRS, but not paid by any health plan.
Limited-purpose medical reimbursement accounts are most often used with
a health savings account (HSA). If you’re enrolled
in a qualified, high-deductible health plan, you can use HSA funds to
pay for medical services pre-tax. You can use your flex account contributions
for qualified expenses
not paid from any other source.
How do I get started?
You’ll need to enroll in a limited-purpose medical reimbursement account
if you, your spouse, or dependents contribute to an HSA, or receive HSA contributions
from an employer or any other source.
At the beginning of the plan year, your employer asks you how much money you
want to contribute for the year. You have only one opportunity a year to enroll,
unless you have a qualified family status change, such as marriage, birth,
divorce, or loss of a spouse’s insurance coverage.
The amount you designate for the year is taken out of your paycheck
in equal installments each pay period. However, the total amount you
elect for your medical reimbursement account is available any time during
the year, even if the funds have not yet been withheld from your pay.
How much should I contribute?
Give some thought to calculating how much money to contribute for the year.
If you put in more money than you need, by law, you lose it. However,
some employers offer a grace
period of up to two-and-a-half months to use the
money.
Use the reimbursement
account worksheet (pdf) to estimate the expected out-of-pocket
medical expenses for you and your dependents for the next year.
How do I get reimbursed for expenses?
- Submit a flex claim with
a copy of the Explanation of Benefits or the provider's invoice and
proof of
payment. Once your claim is approved, you’ll be issued a reimbursement
check.
- Sign up for direct
deposit (pdf) or automatic
reimbursement (pdf) to speed up
the reimbursement process for medical expenses. With automatic reimbursement,
expenses are automatically paid from your
medical reimbursement account, so you don't need to file a claim.
- Pay
the doctor or pharmacy with your Blue Priority Flex debit card,
so the money is taken directly from your account.*
Be sure to keep your receipts in case you need to verify a claim.
What can I spend the money on?
You can use a limited-purpose medical reimbursement account to set aside
money for:
- Dental and vision plan deductibles
- Dental and vision care expenses
- Orthodontia not covered by a dental
plan
What are the tax advantages?
- You can withdraw money tax-free to cover qualified medical expenses.
- Your contributions will be taken from your paycheck before taxes
are calculated, lowering your income tax payments.
- Any contributions
your employer makes don't count as taxable income.
Can I switch to a limited-purpose medical reimbursement during
the plan year?
You cannot have an HSA and a general-purpose medical reimbursement account
at the same time. If you enroll in an HSA-qualified high-deductible health
plan, you can switch from a general-purpose medical reimbursement account
to a limited-purpose medical savings account during the year. If your employer’s
plan includes a grace period, you will not be able to fund your HSA until
the first day of the next month following the end of the grace period.
Keep in mind you may not change from a limited-purpose medical reimbursement
account to a general-purpose account for any reason during a plan year.
* Debit card feature not offered by all employers; contact your benefits
administrator.
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