First, please understand the difference. Many chiropractic patients do not know what they have, so it is important that you understand these key terms.

Traditional Health Savings Account (HSA)

An HSA is a savings account set up to be used for medical expenses and nothing else. Funds directed to the HSA are pretax dollars, thus reducing taxable income, and HSA’s offer interest on the balance. The medical expenses and HSA can be used for include optical, insurance deductions, dental, chiropractic and some over-the-counter medications. Individuals who are covered by high deductible health plan (HDHP) are eligible to open an HSA.

Archer Medical Savings Account (MSA)

An Archer MSA is a tax-favored savings account designed to help you pay for qualified medical expenses if you are an employee of a small employer or a self-employed individual participating in a high-deductible health plan. Archer MSA assets may be rolled over or transferred to an HSA.

Health Flexible Spending Account (FSA)

A health FSA is an arrangement that allows employees to be reimbursed for medical expenses. Health FSAs are usually funded through voluntary salary reduction agreements with the employer. No employment or federal income taxes are deducted from contributions made to a health FSA. In general, balances in a health FSA at the end of a plan year cannot be carried over to the next year. For more information on health FSAs see IRS Publication 969,

Health Reimbursement Arrangement (HRA)

An HRA is an arrangement similar to a health FSA; however, an HRA must be solely funded by an employer. The contribution cannot be paid through a voluntary salary reduction agreement on the part of an employee. Employees are reimbursed tax free for qualified medical expenses up to the maximum dollar amount for a coverage period. Balances in an HRA at the end of a plan year can generally be carried over to the next year. For more information on health HRAs see IRS Publication 969,

Key Differences

The funds contributed to an HRA account are not subject to federal income tax at the time of deposit. Unlike a flexible spending account (FSA), funds roll over and accumulate year to year if not spent. HSAs are owned by the individual, which differentiates them from company-owned Health Reimbursement Arrangements (HRA) that are an alternate tax-deductible source of funds.

Billing Considerations for the Chiropractic Office

All of the above plans qualify for chiropractic reimbursement. The method of obtaining reimbursement varies by the plan type. Some plans will state that they do not pay for prepaid services. This is not accurate, as they will prepay for three years of orthodontic care (braces) and similar “pay upfront” services.

A FSA, or flex-spend account, only reimburses the patient for health care costs they have already paid. The patient must “use or lose” the money that has been put into their FSA each year.

An HSA plan is directed by the patient. They will have a card, similar to a credit card (and processed exactly like a credit card, not a debit card) that pulls from their HSA. This can be used for deductibles, co-payments and prepayments on discount plans.

An HRA plan is maintained by the employer and you must bill directly to the employer (in most cases) for reimbursement.

To avoid confusion for the patient and their HRA or FSA plan, the clinic must provide the patient a receipt or invoice showing that the patient has paid for the service. When a patient begins a treatment plan in your office, and you provide a discount for payment up front for the plan of care, the invoice should show that the patient paid for XX visits in your office. It should not indicate that the patient “pre-paid” for  a care plan as this will often confuse the plan and result in your patient not being fairly reimbursed.

Questions can usually be directed to the company’s human resource department.

Chiropractic offices should promote the fact that they can provide a “Discount for Using Your HSA / Flex Spend Account”. If you have established payment at time of service discounts, or prepayment discounts, encourage patients to use these by promoting the savings they can get. People with these plans are well aware of how quickly they can burn through their heath care dollars and welcome an opportunity to save.

Recent changes due to the Affordable Care Act change how patients may use their HRA or flexspend accounts. These changes took effect on Jan 1st of this year. Here was our answer to Mary, a great Front Desk Coordinator who is on top of this.
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Good Morning Dave,

I have a question. Many of our patients have flex accounts but because of the new laws about not being able to buy over the counter and being reimbursed by the flex accounts I am running into problems with our supplements.

Do you think we could get around this if the Chiropractor wrote on a script card that they (the chiropractor) have recommended the supplement to the patient?

Please let me know what your ideas are on this subject.

Thanks,

Mary

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Hi Mary,

Great question, you are the first to ask that one, so you get the award! 😉

According to the IRS website (http://www.irs.gov/newsroom/article/0,,id=227308,00.html),

Q. How are the rules changing for reimbursing the cost of over-the-counter medicines and drugs from health flexible spending arrangements (health FSAs) and health reimbursement arrangements (HRAs)?

A. Section 9003 of the Affordable Care Act established a new uniform standard for medical expenses. Effective Jan. 1, 2011, distributions from health FSAs and HRAs will be allowed to reimburse the cost of over-the-counter medicines or drugs only if they are purchased with a prescription. This new rule does not apply to reimbursements for the cost of insulin, which will continue to be permitted, even if purchased without a prescription.

So the question would be, would vitamins and supplements be considered “medicine or drugs”. According to the FDA, they are not. There would be exceptions, and they are:

Supplements – The cost of supplements taken for general well-being are not reimbursable. However, the cost of supplements taken to alleviate a specific medical condition is reimbursable. Physician’s diagnosis letter required.

Vitamins – Daily multivitamins taken for general well-being are not reimbursable. Vitamins taken as treatment for a specific medical condition diagnosed by a physician are reimbursable when accompanied by a physician’s diagnosis letter and a prescription.
Massage – Fees paid for massages are not reimbursable unless to treat a physical defect or illness. Physician’s diagnosis letter required.

A chiropractor is defined under federal law as a physician. So a script would not be needed per se, but a letter of diagnosis with the prescripted supplement would. It will vary based on the patient, case and condition. Sorry this is a longer answer than your question, but I had to look up the info and put it together for you. I have also attached an article that explains the difference between plans, how to use them for chiropractic care, and how to use them for prepay plans.

I hope that clarifies the situation. Let me know if you have any questions.

thanks,

Dave