Frequently Asked Personal Choice Account Questions:
•What does Personal Choice Account offer?
•Do I need to change insurance providers to participate?
•Who is eligible to participate?
•What are qualified expenses?
•Are there any risks? What are they?
•Under what circumstances can the annual election be changed?
•How soon must employees submit claims?
•Can a participant be reimbursed before they have contributed the amount to the account?
•What is the maximum allowable allocation for an FSA?

Frequently Asked Health Reimbursement Arrangement Account Questions
• Our Company has a Healthcare Flexible Spending Account through Personal Choice Account and we'd like to add an HRA. Which account reimburses health expenses first?
•Who is eligible to participate in an HRA?
•How much should I contribute for each employee?
•Is prefunding of the HRA required?
•Is there a risk in prefunding the HRA? Can I lose money if employees run up large claims early in the year and then terminate?
•Can I define the HRA carry over amount?
•Can employees use pre-tax salary reductions to contribute to the HRA?
•What types of medical expenses can be reimbursed with the HRA?
•Is the HRA allocation based on a calendar year or a plan year?
•Can employees cash out unused HRA amounts before retiring or changing jobs?

View Participant FAQs

What does Personal Choice Account offer?
Personal Choice Account is a Section 125 Cafeteria Plan that offers your employees a choice to pay for certain qualified benefits on a pre-tax basis. Paying for certain benefits with pre-tax dollars reduces the amount your employees pay in taxes and increases their take-home pay.

Do I need to change insurance providers to participate?
Because Personal Choice Account is not tied to an insurance plan or company, there is no need to change insurance providers.

Who is eligible to participate?
Only employees are eligible to participate in the FSA. Therefore, two percent or more owners in an S Corporation, sole proprietors, partners in a partnership, LLCs, and LLPs are not eligible to participate in the plan. Your Personal Choice Account representative will work with you to resolve any eligibility questions.

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What are qualified expenses?
Qualified expenses include deductibles, co-insurance and co-payments. In addition, FSA’s and HRA’s can reimburse out of pocket expenses for dental care, prescriptions, eyeglasses and over-the-counter medications. Under the IRS code these are known as 213d expenses.

Are there any risks? What are they?
There are basically two risks:
1. Under the Use-It-or-Lose-It Rule money not used by the end of the Plan Year is retained by the company. The Personal Choice Account will assist employees with precautionary steps to avoid having large amounts left in the Plan at year-end.
2. Under the Uniform Coverage Rule the employer is at risk if an employee quits with a negative balance. The Personal Choice Account can recommend steps to help reduce this minimal risk, and The Personal Choice Account fronts the money.

Under what circumstances can the annual election be changed?
Changes to the dependent care account can be made if the participant experiences a qualified change in status (marriage, divorce, birth, death, adoption, a spouse changing employment, or a job shift change for the employee or their spouse that directly affects their child care). Changes to the unreimbursed health expense account are based on a more limited set of qualifying events, and can be made only if the plan you have adopted allows changes to this account.

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How soon must employees submit claims?
Employees may submit requests for reimbursement at any time during the year, (however, claims must be received in our office no later than the 90th day) after the plan year to submit claims that were incurred during the plan year.

Can a participant be reimbursed before they have contributed the amount to the account?
It depends on the type of account. With a dependent care account, the eligible reimbursement amount is available only after the funds have been payroll deducted and those funds have been received by Personal Choice Account. For the unreimbursed health expense account, the reimbursement process will start after the plan year is established and we have received the first payroll reduction of the plan year. Participants have access to their total annual election at this time.

What is the maximum allowable allocation for an FSA?
It varies by the type of account. For a dependent care FSA, the maximum is $5,000 per calendar year, or $2,500 if married filing separately. With a healthcare spending account, the maximum annual election is up to you, the employer. With a premium only plan, no such maximum applies as the premium is the only pre-tax deduction.

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Have another question about FSAs? Feel free to contact us.


Frequently Asked Health Reimbursement Arrangement Account Questions

Our Company has a Healthcare Flexible Spending Account through Personal Choice Account and we'd like to add an HRA. Which account reimburses health expenses first?
It's up to you. Simply let us know what works best for you and we can design your plans accordingly.

Who is eligible to participate in an HRA?
Except for owners and partners, all employees are eligible to participate in an HRA. According to IRS guidelines, anyone with two percent or more ownership in a schedule S corporation, LLC, LLP, PC, sole proprietorship, or partnership may not participate. Your Personal Choice Account representative will work with you to resolve any eligibility questions.

How much should I contribute for each employee?
As the employer, you have the flexibility to set your own HRA allocation amount. In general, we recommend funding the HRA at 50 to 75 percent of your health plan's annual deductible for each employee. That level gives employees a reasonable amount of first-dollar coverage while still providing for some cost sharing.

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Is prefunding of the HRA required?
Prefunding of an HRA is not required. There are several options: The HRA can be prefunded if you choose; The employer could split the total annual HRA allocation up over 12 months and allow employees to access only the accrued amount; As HRA-eligible claims are incurred, we can bill you for the total reimbursable claims each month or replenish the HRA funds via direct deposit.

Is there a risk in prefunding the HRA? Can I lose money if employees run up large claims early in the year and then terminate?
Yes, that's an inherent risk with both FSAs and prefunded HRAs. A prefunded HRA might not be a good fit for businesses with high employee turnover. For those situations, an HRA that is not prefunded might be wise. The employer could split the total annual HRA allocation up over 12 months and allow employees to access only the accrued amount.

Can I define the HRA carry over amount?
Yes, you may set rules on the HRA carry over provision, and may choose to impose an annual carry over maximum. You may also cap the total HRA account balance if you wish.

Can employees use pre-tax salary reductions to contribute to the HRA?
No, the HRA itself can only be funded with employer contributions. If offered with an insurance plan under a cafeteria plan, the employee portion of the premium may be paid with pre-tax dollars under a cafeteria plan.

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What types of medical expenses can be reimbursed with the HRA?
To a large extent, that's up to you as the employer. You can allow reimbursement of a broad range of health-related expenses by adopting the IRS Section 213(d) definition of allowable expenses. Doing so would allow HRA reimbursement of the same expenses allowed under a healthcare FSA, including medical, dental, vision and prescription drug.

Alternatively, you can set up your HRA to allow reimbursement of only certain types of health-related expenses. Many employers limit HRA reimbursements to expenses that are covered under their health plan but subject to the deductible. You might then consider offering employees an FSA to self-fund other expenses not allowed under the HRA, such as dental and vision care.

Is the HRA allocation based on a calendar year or a plan year?
The HRA allocation is generally based on the plan year. However, if you purchase an HRA mid-year and want to adjust the HRA's plan year to coincide with your medical plan's calendar year deductible, we would prorate the first (partial) year's HRA allocation, and begin the full annual allocation on the following January 1.

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Can employees cash out unused HRA amounts before retiring or changing jobs?
No, the HRA can only be used for reimbursement of medical expenses. The plan may be designed, however, to permit a terminated employee be reimbursed for medical expenses incurred after the termination date.

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Have another question about HRAs? Feel free to contact us.