Sort of OT: Flexble Health Spending Accounts

I received an email from by Flexible Health spending account saying that the IRS will change the rules on what these accounts will be able to pay for, beginning July 1, 2009.

From the email I recieved:
"Since January 1, 2008, the Internal Revenue Service (IRS) identified which merchants would be qualified to accept
healthcare cards (such as the PayFlex™ Card). The IRS has since issued additional rules specifying where healthcare
cards can be used. As of July 1, 2009, the PayFlex™ Card will only be accepted at:

• Healthcare-related merchants, such as physician and dentist offices, vision care providers and hospitals.

• Non-healthcare related merchants, such as grocery stores, discount stores, wholesale clubs, web-based
merchants (ie. drugstore.com) that use an IRS-approved inventory information approval system.

• Drug stores and retail pharmacies that have implemented an IRS-approved inventory information approval
system or satisfy the IRS’ 90 percent rule. The 90 percent rule means that 90 percent of the store’s income
consists of eligible healthcare expenses. Please note that the decision to comply with the IRS’
requirements is made by the individual drug store or pharmacy.

• All Walgreens locations will continue to accept the PayFlex Card due to implementing their own IRS-approved
proprietary system. Please note Walgreens will not be listed on the SIGIS merchant listings available via the links below.

In all cases, the merchant must accept MasterCard® in order for the PayFlex Card to work."



I'm going to follow up with cpap.com as to their eligibility under bullet #2. Anybody else hear about this?

I just received a pay flex mastercard and am thinking of using it on my next order. I thought I would bump this subject up and see if anyone else has tried using pay flex on cpap.com

I choose not to get the card option for my FSA plan, because I didn't want them taking the $12 out of what I'm putting into the FSA to pay for the card. Plus they said I would still have to file the same paperwork to justify the expenses.

OTOH, I have gotten FSA reimbursement for my CPAP.com purchases.

So, I would guess the card would work and they would allow it, it would just be question of whether they required you to submit additional documentation or not....

The Dreamer.

TheDreamer wrote:I choose not to get the card option for my FSA plan, because I didn't want them taking the $12 out of what I'm putting into the FSA to pay for the card. Plus they said I would still have to file the same paperwork to justify the expenses.

The Dreamer.

Nowadays you can use your FSA card at many places and NOT have to file the paperwork. Most large pharmacies are now "on-line" and your documentation is sent directly to the FSA plan. I LOVE our cards and it saves me oodles of time.

I don't know anything about using it on cpap.com but I'd have to think it would work just fine.

I used my card Saturday at Walgreen's for contact solution and a prescription with no problem. I usually have around 1500 dollars of copays on prescriptions a year so I figured it would be worth getting the card for the tax break. From my understanding at our benefits meeting we do not have to fill out any paperwork ( unlike previous years) we just need to swipe the card. I hope there are no fees involved. I think it is one of the benefits of the job. I should of read the small print when I signed up but the personnel lady is usually straight forward with us and very informative at our meetings and did not mention any fees. In a year or two I am thinking of buying a extra machine from CPAP.com that is data capable. I hope to save a little tax wise with pay flex.

Just so everyone knows, the house version of the new Health Care reform bill (HR 3962, The so called " Affordable Health Care for America Act), proposes to change the FSA rules in two ways.
1.) Caps FSA at $2500, currently no cap.
2.) Changes FSA rules so that non-prescription or over-the-counter medication will not be eligible for reimbursement.

Also the bill includes a new excise tax on the wholesale price of medical equipment including CPAPs. So everyone will pay this new tax, including poor people who buy CPAPs.

If you are not happy with these changes (they are essentially middle class tax increases) and will actually drive up the cost of health care in the case of limiting OTCs, you may want to email your congressmen.

Whether or not you agree with the Health Care Reform bill that is on its way to law, you may be able to influence these changes as when the senate and H of Reps put their final changes together they may be able to make more changes. It also lets congress know that sneaking in middle class tax increases or new taxes on medical equipment is not cool.

el_zorro wrote:Just so everyone knows, the house version of the new Health Care reform bill (HR 3962, The so called " Affordable Health Care for America Act), proposes to change the FSA rules in two ways.
1.) Caps FSA at $2500, currently no cap.
2.) Changes FSA rules so that non-prescription or over-the-counter medication will not be eligible for reimbursement.

Also the bill includes a new excise tax on the wholesale price of medical equipment including CPAPs. So everyone will pay this new tax, including poor people who buy CPAPs.

If you are not happy with these changes (they are essentially middle class tax increases) and will actually drive up the cost of health care in the case of limiting OTCs, you may want to email your congressmen.

Whether or not you agree with the Health Care Reform bill that is on its way to law, you may be able to influence these changes as when the senate and H of Reps put their final changes together they may be able to make more changes. It also lets congress know that sneaking in middle class tax increases or new taxes on medical equipment is not cool.

You gotta be kidding me. Why would they tax wholesale medical equipment and over he counter drugs? The more I hear about this bill the more I don't like it. I wonder what else we will find out about this Bill after the damage is done. No wonder they vote on this bill in the middle of the night when no one is watching.

frazzled-snoozer wrote:

TheDreamer wrote:I choose not to get the card option for my FSA plan, because I didn't want them taking the $12 out of what I'm putting into the FSA to pay for the card. Plus they said I would still have to file the same paperwork to justify the expenses.

The Dreamer.

Nowadays you can use your FSA card at many places and NOT have to file the paperwork. Most large pharmacies are now "on-line" and your documentation is sent directly to the FSA plan. I LOVE our cards and it saves me oodles of time.

If you use the FSA card you don't have to "file" receipts to "prove" your healthcare purchase. However, you still must "maintain" the receipts with your taxes for the year you use it. If you are audited by the IRS and cannot prove where the precious non-taxed funds were spent, you will be fined by the IRS. This happened to my coworker and she ended up paying all the unproven funds back plus taxes on those funds plus penalties.

That's the reason I don't use the card, I know how undisciplined I am with receipts. The changes this year may come from all the people being fined over their lack of "receipts". Making it harder to use the card for unapproved purchases.

YawnGirl wrote:If you use the FSA card you don't have to "file" receipts to "prove" your healthcare purchase. However, you still must "maintain" the receipts with your taxes for the year you use it. If you are audited by the IRS and cannot prove where the precious non-taxed funds were spent, you will be fined by the IRS. This happened to my coworker and she ended up paying all the unproven funds back plus taxes on those funds plus penalties.

That's the reason I don't use the card, I know how undisciplined I am with receipts. The changes this year may come from all the people being fined over their lack of "receipts". Making it harder to use the card for unapproved purchases.

I have a file where I keep them all. I also keep an accounting on Quicken. You'd want to keep all medical receipts anyway even if you didn't use your FSA in case you might itemize it on your taxes.

el_zorro wrote:Just so everyone knows, the house version of the new Health Care reform bill (HR 3962, The so called " Affordable Health Care for America Act), proposes to change the FSA rules in two ways.
1.) Caps FSA at $2500, currently no cap.
2.) Changes FSA rules so that non-prescription or over-the-counter medication will not be eligible for reimbursement.

Thank's for keeping us updated on the legislation. I knew our FSa's would be affected. It's so terrible because I believe FSA's should be the cornerstone of the healthcare overhaul. Instead they'll get trashed with all the other good ideas. I'd contact my congressman except... he already agrees with me and no one like him will even be allowed in the room where they're hammering out the final bill. I suppose he'll have to watch it unfold on c-span like the rest of us..... Oh wait...... it won't be on there either!!!!!!