Medical Reimbursement Accounts

Most of the out-of-pocket medical expenses for your employees, their spouse and their dependent children can be paid for using pre-tax dollars, even if they are not participating in a group health plan

With a YourFlex Medical Reimbursement Account your employees can use pre-tax funds to pay for most out-of-pocket medical expenses for themself, a spouse and their dependent children that will not be otherwise paid by your medical insurance.

Here's how it works for your employees:

A list of the most common types of medical expenses reimbursed is included here. Note: You and your family do not need to participate in your company’s group health insurance plan to participate in the YourFlex Medical Reimbursement Account.

Expenses reimbursed through your Medical Reimbursement Account cannot be deducted as an itemized medical expense on your tax return at year-end. For most people, this is not an issue. Most people are not itemizing deductions (using Schedule A). Of those that do itemize their deductions, only a few can deduct medical expenses.

If you or your spouse participates in a Health Savings Account (HSA), neither you or your spouse will be able to participate in a Medical Reimbursement Account unless your Medical Reimbursement Account is a limited-purpose account.

What can I buy with pre-tax money?

The IRS makes the rules on what is reimbursable. If it can be counted as a tax deduction (authorized under Section 213 of the Internal Revenue Service Code), it's on the approved list. Also, with a doctor’s note certain over-the-counter medicines can be reimbursed from a YourFlex Medical Reimbursement Account.

The list here gives you an idea, but it is not all-inclusive. Log in to your account for an up-to-date list. If you have a question about a specific item feel free to call. Or, read IRS Publication 502, which you can download here.

Accounts focusing on dental and vision

are available from YourFlex. Details are here.

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YourFlex makes understanding

the IRS’ rules easy with these guidelines

The IRS treats Medical Reimbursement Accounts differently from most reimbursement accounts. It is important to know how those regulations will affect you. Most of these rules encourage employees to open an account and take advantage of the tax savings that come with it.

• All money put aside into a Medical Reimbursement Account is deducted from your paycheck completely pre-tax. No Federal, State or FICA taxes are ever paid on that money. When you get your W-2 at yearend, your gross wages, Social Security wages, and Medicare wages will be reduced by any amount you put into your account during the calendar year.

• A Salary Redirect Agreement is required each year to participate in this YourFlex plan. It must be submitted before the plan year begins. Your election amounts cannot be rolled over from year to year.

• Your “election amount” is the amount you elect to contribute to your account during the plan year. Your entire election amount is available for reimbursement to you the first day of the plan year.

• Because the entire election amount is available on the first day of the plan year, you will not be allowed to make changes to that election amount during the plan year unless you have a Change of Family Status.

• Some YourFlex plans allow for an additional time period after the end of the plan year to use the money from the previous plan year. This is called a grace period. Benefit Solutions provides a Quick Fact Sheet in the enrollment package to see if your plan provides for a grace period.

Questions? Email info@yourflex.com or call Benefit Solutions at 804-379-0909.