If you have both a Health Savings Account (HSA) and a Health Flexible Spending Account (FSA), and you’ve had a debit card transaction pay from the wrong account, this post will guide you through the steps to correct the transaction and reimburse yourself from the proper account.
Scenario 1: An amount paid out from your HSA and needs to be corrected to pay out of your FSA.
Scenario 1: You are enrolled in both an HSA and a Limited Purpose FSA. You go to Costco and receive care for a vision expense and pay for the cost of the service using your 24HourFlex Debit Card. You expect to see the amount paid from your Limited Purpose FSA, since that account is limited for use on dental and vision expenses and typically pays before the HSA for expenses that eligible under both plans. However, upon reviewing your account, you find that the expense was paid using HSA money instead. Typically, this issue is caused when the merchant code — the code that helps identify the type of expense by the location where you are using the card — is categorized as a medical code. If this occurs, your card will be accepted but funds will be pulled from the account that is eligible to pay for medical expenses: your HSA. In order to pay for the expense from your Limited Purpose FSA instead, you will need to follow the steps outlined below.
How to Resolve the Issue
If you find yourself in the scenario described above, or a similar situation in which an amount paid from your HSA and you need to use FSA funds instead, please follow the steps below to reimburse yourself for the expense from your FSA and repay the amount used to your HSA.
1. File a claim for the expense in your FSA.
In order to be reimbursed for the expense from your FSA, you must file a claim. You can file a claim in your online Consumer Portal or via the 24HourFlex Mobile App, and you will need an itemized receipt showing the eligible expense(s) incurred. For instructions on how to file a claim, read our post here.
2. Download and fill out an HSA contribution form.
Now that you have filed a claim to be reimbursed for the expense from your FSA, you must go through the process to repay the expense to your HSA. You will first need to log in to your online Consumer Portal. Once in your Consumer Portal, click on the “Tools & Support” tab in the top menu.
From the tools and support page, click on “HSA Contribution Form” under the Forms section to download the form.
Please fill out the HSA Contribution Form completely (required fields are marked in red in the screenshot below). When completing the form, make sure to select “Mistaken Distribution” under Contribution Type. This indicates that you are contributing money to your HSA to repay an amount (as opposed to just making an additional contribution to your account).
3. Write a check and mail to 24HourFlex.
After you have finished filling out the HSA Contribution Form, write a check for the amount you need to contribute back into your HSA (remember: you are getting reimbursed from your FSA for the expense from filing a claim), and mail both the check and the completed form to 24HourFlex at:
Attn: HSA Department
P.O. Box 3789
Littleton, CO 80161
Please note that the processing of the mailed check and full resolution of the transfer make take up to 2 weeks. If you still have not seen the check processed and the amount posted to your HSA after two weeks, please contact 24HourFlex.
It is important for you to complete all steps indicated above to move an HSA expense to your FSA. Issuing yourself payment from both your FSA and your HSA is NOT allowed and can result in tax penalties.
Scenario 2: An amount paid out from your FSA and needs to be corrected to pay out of your HSA.
Scenario 1: You were enrolled in an HSA in a prior year, but you decided to switch to a full Medical FSA for the current plan year. You received a bill in the first month of your new plan year for a doctor’s expense that occurred before your prior plan year ended, and you used your 24HourFlex Debit Card to pay the expense. The Debit Card pulls money from your Medical FSA to pay the expense, but the transaction is flagged in your account, due to the fact that funds from your current year’s account were used to pay last year’s expenses (FSA rules state you must use your FSA money only in the plan year for which you’ve elected). However, even though you cannot use your Medical FSA to pay for the expense, you still have money left in your HSA from previous years that you can use to reimburse yourself for the cost of the bill (HSA funds, unlike FSA funds, can be used at any time after the account is opened, regardless of plan year). As a result, you must address the flagged transaction in your FSA and use your HSA money to cover the expense instead.
Scenario 2: You have a Limited Purpose FSA and an HSA, and you use your 24HourFlex Debit Card to pay for an expense that, while suggested by your dentist, actually is considered a medical item (e.g. a prescription for pain medication after a dental procedure). The Debit Card pulls money from your Limited Purpose FSA to pay the expense, but the transaction is flagged in your account, due to the fact that the expense is identified as a medical expense (a Limited Purpose FSA may only be used on eligible dental and vision expenses). However, you can you use your HSA money to reimburse yourself for the cost of the medical product or service. As a result, you must address the flagged transaction in your FSA and use your HSA money to cover the expense instead.
How to Resolve the Issue
If you find yourself in one of the scenarios described above, or a similar situation in which an amount paid from your FSA and you need to use HSA funds instead, please follow the below two steps to resolve the issue and get reimbursed for the expenses incurred.
1. Repay the expense to your FSA.
At the time when you swipe your debit card, the merchant or provider has been paid. However, since the amount paid was for an expense that was not FSA-eligible, you must repay your FSA to replace the ineligible funds that were used. To make a repayment, you must log in to your online Consumer Portal and follow the steps in our post here.
2. Issue yourself a distribution from your HSA.
Once you have repaid the amount to your FSA, you can reimburse yourself for the expense from your HSA by issuing a distribution. To issue yourself a distribution — that is, to withdraw money from your HSA — you will need to log in to either your online Consumer Portal or the 24HourFlex Mobile App. Once logged in to your account, you can follow the steps for issuing an HSA distribution here.