Using an FSA to Help Pay for Medical Expenses

A flexible spending account (FSA), offered as an elective benefit by many employers, permits workers to contribute, through payroll deduction, to accounts that are designated for specific qualified medical or dental expenses not covered under your health insurance plan. All amounts contributed are pretax and funds are not taxed when spent on qualified health care costs.
FSAs are employer-based; self-employed individuals are not eligible. To participate, you usually must enroll through your employer each year, even if you do not want your deduction amounts to change from year to year. Employers generally offer enrollment during open enrollment periods when you enroll for the entire plan year. If you want to change or revoke your election before the end of the plan year, you typically can do so only if your plan permits a change due to circumstances in your employment or family status.
Before contributing to an FSA, you must first designate how much you want to contribute for the year, based on an estimate of your expected out-of-pocket costs. Your employer will then deduct amounts from your paycheck in accordance with your annual election. Although there is no IRS limit on the amount of money you or your employer can contribute to the accounts, each plan prescribes either a maximum dollar amount or a maximum percentage of your salary that can be contributed.
Some key considerations:

• You do not pay federal income tax or employment taxes on the salary you contribute or on any amounts your employer may contribute to the FSA. However, amounts contributed that are not spent by the end of the plan year are forfeited. For this reason, it is important not to overestimate the qualifying expenses you expect to incur during the year.
• Eligible expenses include most of the out-of-pocket costs not fully covered by your health plan, including copayments, deductibles, vision care, prescriptions, dental care, tests, and medical supplies, among others. Over-the-counter medications are no longer eligible, except for insulin. See IRS Publication 502 at www.irs.gov for a more detailed list of qualifying expenses.
• In order to use funds set aside in your FSA, you must either submit claims for reimbursement or use the debit card, credit card, or stored value card provided by the vendor overseeing the FSA. For more information on reimbursement procedures or how to file claims, talk to your employee benefits administrator.

Not for Everybody
Whether an FSA will suit your needs depends largely on the out-of-pocket costs you expect to incur and how accurately you can predict them. If you expect to incur no more than a few hundred dollars over the course of the year, it may not be worth the trouble of setting up an FSA. On the other hand, for those with predictable medical costs or ongoing treatments that are not covered by an employer-sponsored medical plan, an FSA can be a good way to set aside funds while lowering your tax bill. Ultimately, the decision boils down to your particular circumstances and needs.

© 2011 McGraw-Hill Financial Communications. All rights reserved.

© Carmen Coleman, President and CEO

Lifetime Financial Group, LLC
30 W. Broad Street, Suite 300

Rochester, NY 14614

(585)325-2525 

Tracking# 715282

Can You Hear me?

I stopped in Home Depot to pick up a light bulb for my outside lamp post a few days ago. A sales representative helped me to locate the proper bulb. As we exchange information i.e. what I needed?, the different options available e.g. LED, solar, etc. and the price ranges I noticed that the gentleman often leaned to one side and almost always asked that I repeat what I had just stated.

As a volunteer Board Member and Officer of the Hearing Loss Association of America – Rochester (HLAA-Rochester), I suspected that something was not right. So I asked, are you hearing me O.K.? He replied, no, I am deaf in one ear. Immediately, I asked, then why don’t you wear a hearing aid?

His response was a common one especially for Senior Citizens. He said that he did not wear a hearing aid because he could not afford one. The cost of hearing aids can range from approximate $4 to 8 thousand dollars. If you are a senior and live on a fixed income, like Medicare, then, it is likely that you may not be able to afford to purchase one.

Approximately 12% of the U.S. population or 38 million Americans have a significant hearing loss. Thirty to forty percent of people over 65 have some type of hearing loss. Hearing aids can offer dramatic improvement for most people with hearing loss.

Medicare does not provide coverage for hearing test or hearing aids, eye care, dental services, foot care and many other services. Additional Services are available to seniors through Medicare Advantage Plans. Each carrier offers different “additional” services. I was surprised to learn that the gentleman was currently enrolled in a Medicare Advantage Plan; however, it was one that did not offer hearing exams or hearing aids. Lifetime Financial Group specializes in assisting seniors with understanding Medicare, Medicare Advantage Plans, and understanding their needs prior to enrollment.

Persons, who are either disabled or Age 65 and qualify for Medicare Part B, can enroll in an advantage plan. There are no pre-existing conditions. You must be a US Citizen, live in the plan service area, and not currently be receiving dialysis treatment.

Seniors can enroll and or switch plans during the Annual Enrollment Period (AEP) during the Fall (October through December). There is a Special Enrollment Period (SEP) for seniors who might have moved outside of the plan service area, become disabled, or qualify for Medicaid status.

 If the senior is turning 65, and qualifies for Medicare Part B, then he/she will be given an initial enrollment period (IEP) for 7 months. The government will give you 63 days after your IEP to sign up for a prescription drug plan or you will receive a Late Enrollment Penalty (LEP). Contact our office to learn how you can avoid this penalty or sign up for a workshop.  

HLAA-Rochester also has access to Audiologist who dispenses donated Hearing Aids. I asked the gentleman to call us so that we can assist him with receiving a donated hearing aid until the next annual enrollment period (AEP).

If you know a senior who has difficulty hearing, there is help available. Please call us!

© Carmen Coleman, President and CEO

Lifetime Financial Group, LLC
30 W. Broad Street, Suite 300

Rochester, NY 14614

(585)325-2525 

Patient Status in Hospital could lead to Costly expenses for Medicare Beneficiaries

Imagine becoming ill or having an injury and being rushed to the hospital’s emergency room. This is a terrifying experience at any age; for most, it very time consuming and can be costly. You might be surprised to know that after several days in the hospital, that you were never classified as an inpatient. You were considered an outpatient, in “observation” status. Why is this important?

Traditional Medicare requires a three day inpatient stay before it will cover the first 20 days of rehabilitation care in an approved nursing facility. If the hospital classifies you as “observation” status instead of inpatient status, you do not qualify for Medicare services after you are discharged from the hospital and will be responsible for the full bill for rehabilitation services. Traditional Medicare will not cover you. The cost for nursing home care can exceed $400 a day.

You might be wondering, How can this happen? Observation status looks and feels like full hospital admission, but technically you are an outpatient. You might have been assigned to a room on a floor, stayed several days, having doctor and nurse care with several test. You will receive the same care in the hospital if you were classified as “inpatient”, however you will not quality to receive any additional care under traditional Medicare because you were “observation” status or otherwise, never admitted.

Medicare Advantage Plans do not necessarily have the same rule. Excellus, Blue-Cross, BlueShield  reported that hospital status will not affect eligibility for rehabilitation as long as the services are deemed necessary. MVP Healthcare on the other hand, requires a three day qualifying stay in order to be eligible. United Healthcare does not require a 3-day prior hospital stay to qualify for skilled nursing care. However it is important to note that, unless the provider writes an order to admit you as an inpatient to the hospital, you are an outpatient and pay the cost sharing amounts for outpatient surgery. Even if you stay in the hospital overnight, you might still be considered an outpatient. People with private commercial insurance plans are also subject to the terms and conditions of their contract.

A study in the June 2012 issue of the journal Health Affairs reported the ratio of observation stays to inpatient admissions from 2007-2009 among fee-for-service Medicare patients increased 34 percent. Local data reflect national trends.

Increased “observation” stays might be a result of payment policies. Medicare routinely performs audits on hospital billing practices and flags patients where it is determined that an outpatient procedure would have sufficed over a hospital stay. In some cases, the hospital loses the revenue billed, even after an appeal process is completed. It is good to note that recently, The Center for Medicare Services will permit hospitals to re-bill in cases where hospital admissions are not deemed to be justified.

Hospitals therefore are being creative to insure that they receive payment for services provided.

Senator Charles Schumer, D-N.Y., announced early in March his plan to introduce a bill that would have observation stays count toward the three day requirement.

In the meantime, know that patients admitted through the emergency department are considered in observation status in many hospitals. Once there, be certain to have the conversation with the doctor so that you are not blindsided once discharged. 

For more information, read: Patient Status in Hospital can lead to a jolt, http://www.democratandchronicle.com/article/20130324/NEWS01/303240034/?nclick_check=1

Carmen Coleman, is a trusted Medicare Advisor and Consultant. She owns Lifetime Financial Group in Rochester, NY offering an array of insurance products including Medicare Advantage Plans. Visit her webpage: http://www.rochesterseniors.net

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© Carmen Coleman, President and CEO

Lifetime Financial Group, LLC
30 W. Broad Street, Suite 300

Rochester, NY 14614

(585)325-2525 

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© Carmen Coleman, President and CEO

Lifetime Financial Group, LLC
30 W. Broad Street, Suite 300

Rochester, NY 14614

(585)325-2525