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Use it or Lose it

Dr. Karen Sedore
in Finances
By Karen Sedore DC CPCO

Are celebrations and gift-giving leaving your patients short on cash? The cost of treatment may be pressing on your patients’ minds around the holidays. For some patients, the dilemma is choosing between enjoying the holidays or spending money on healthcare. The solution – tax favored health plans such as Flex Spending Arrangements (FSAs), Health Savings Accounts (HSAs), and Health Reimbursement Arrangements (HRAs). These sources of payment are often overlooked and, more importantly about FSAs, many of them must be used up by December 31st. If your patients don’t use it, they lose it. There is a lot of versatility in how patients can use these health care dollars and chiropractic care is a great way to take advantage of them.

So Many Ways to Save

Whether by choice or necessity, more patients are becoming enrolled in High Deductible Health Plans (HDHP). These plans are available through employers, insurance agents, and through the Marketplace as part of the Affordable Care Act. The advantage of a HDHP is that, in exchange for a higher deductible and out-of-pocket limit, the enrollee pays a smaller monthly premium.

Much of what is done in your office qualifies for payment under these plans even if the service isn’t covered by insurance. The expense must be the patient’s financial responsibility to be considered eligible; any portion covered by the patient’s insurance does not count. Tax courts have ruled in favor of patients using various types of alternative therapies if the treatments are for a specific condition1. Even experimental treatments may be eligible. Some examples of qualifying expenses include:

  • Deductibles, co-pays, or co-insurance that are the patient’s financial responsibility
  • Wellness/Maintenance care
  • E/M services, x-rays, or lab work
  • Nutrition counseling
  • Weight loss programs
  • Acupuncture
  • Massage
  • Active and passive modalities
  • Orthotics
  • Laser therapy
  • Decompression treatment
  • Elastic taping
  • Topical pain-relieving ointments or hot/cold packs sold for home use
  • TENS units, braces, cervical pillows, and other durable medical equipment (DME)
  • Supplements (must be prescribed by a doctor and used to treat a specifically diagnosed disease or condition. A recommendation and rationale for the supplement written in a patient’s treatment plan by a chiropractor will suffice)

As with all good things, there are also some limitations. These tax-favored accounts cannot be used to pre-pay for any future services, to purchase gift cards, or for services or products that are not intended to be used by a covered individual in the plan. The cost to enroll in a Discount Medical Plan Organization (DMPO) is usually not eligible, but the patient’s share of expenses after the applied discount is.

How Do Flex Spending Arrangements Actually Work?

Flex Spending Arrangements (FSAs) are sometimes referred to as §125 plans or cafeteria plans. They are part of a large group of benefits offered by some employers and, like in a cafeteria, employees can pick and choose which benefits they would like. The employee chooses how much they would like to put into their FSA yearly, and it is taken out of their paycheck throughout the year. When the employee incurs a qualifying medical expense, they may be able to pay for the expense with a debit card associated with their FSA or they might be required to submit a written statement or bill to their FSA administrator before a reimbursement is made. FSAs have one very important caveat- the funds in the account usually expire at the end of the calendar year. There may be exception in some plans that allow a certain amount to rollover or a two and a half month grace period, but these situations are not typical.

HSAs, MSAs, and HRAs: Same Great Benefits, Slightly Different Rules

While an employer can contribute to a Health Savings Account (HSA) on behalf of their employee, HSAs are individually-owned by the account holder giving a little more control over when and how funds are used. What makes HSAs different from FSAs are that these accounts will allow a person to carry over any unused funds into future years without any penalty. For 2018, patients on a self-only plan were able to contribute up to $3,450 and families could contribute up to $6,900. This means that there could possibly be thousands of dollars available to pay for out-of-pocket expenses.

Medical Savings Accounts, or Archer MSAs, are less commonly seen but have rules like HSAs. Health Reimbursement Arrangements (HRAs) are typically only funded by an employer to help their employees offset the costs of their deductible and other out-of-pocket expenses. They are like a hybrid of the FSA and HSA where the employer handles the managing of the account, but the employee may carry over any unused funds to future years without penalty.

Comparison of Tax-Favored Health Accounts2






No eligibility requirements Requires a High-Deductible Health Plan (HDHP) No eligibility requirements

2018 Contribution Limits

$2,600 individual $3,450 individual $6,900 family Set by the employer

Payment of Expenses

Debit Card/ Reimbursed by employer Debit Card Reimbursed by employer


Any unused balance is forfeited at the end of the year (some accounts may have any additional 2 ½ month grace period or up to a $500 rollover limit) Unused balance rolls over from year to year Unused balance rolls over from year to year if permitted by the employer


Can withdraw money before it’s in the account up to the amount the employee has elected to contribute for the year Can only withdraw funds currently in the account Can only withdraw funds currently in the account


How to Promote the Use of Tax Favored Health Accounts in Your Practice

Think of an FSA like Cinderella – at the stroke of midnight on New Year’s Eve, your patient’s money will turn into a pumpkin and be gone forever. Now is the time to start asking patients about these accounts and find out if any unused funds are available. A patient may have an FSA set up through their employer and have no idea that the account even exists! They may not have been told that chiropractic care and other services are eligible expenses, so ask. The best time to ask is during the verification of insurance call. While the insurance carrier can’t say how much is in the account, they can at least advise if the patient is covered by a qualifying High Deductible Health Plan.

So, there are funds available…great! Find out how the plan works for reimbursement purposes. Does the patient have a debit card and complete control over the money in the account? Will the patient have to submit a superbill to their employer for reimbursement later? Being clear on the plan’s requirements is extremely important. If it is not done right, it is not getting paid.

Documenting the need for eligible services is no different when it comes to these plans. Having a treatment plan, a specific and accurate diagnosis, and appropriate supporting documentation will usually suffice. Be sure to follow HIPAA guidelines before releasing any PHI to a patient’s employer, fund administrator, income tax advisor, or the IRS.

Get the word out there! Remind patients about their FSA dollars before it’s too late.

Talk to patients who were hesitant to pay out-of-pocket earlier in the year for items such as pillows or orthotics or use this as an opportunity to clean up outstanding balances on your AR reports. Finish this year strong with your office’s winter promotions by including the phrase “services may be FSA/HSA/HRA eligible” in your marketing materials. Discuss the use of these accounts during eligible patients’ Financial Report of Findings to provide them with another option to help keep their care affordable. Even though this year is coming to an end, a new benefit year is right around the corner. Use tax-favored accounts as an opportunity to increase your office’s revenue while providing your patients with the fantastic care that they need.

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Dr. Karen Sedore has over 10 years of experience working in the chiropractic profession. She began as a manager specializing in billing and medical necessity as well as taking on chiropractic assistant responsibilities so that she could be more involved with patient care. She also has experience with income tax preparation and has helped hundreds of families and small businesses with tax planning. In 2016, Dr. Sedore received her doctorate in Chiropractic from National University of Health Sciences. She joined KMC University in 2017 and assists doctors and their staff in her current role as an Account Manager.