Ask Terry Questions FSA vs HCA deduction order

FSA vs HCA deduction order

By Terry Savage on March 15, 2024 | Insurance & Annuities

Hi Terry – I love your page and when you are on WGN. Here is my question:

For years my company has offered a FSA plan. I would contribute whatever amount I knew my family would use *for sure* (use it or lose it). They also offer a HRA account in which they contribute $1000. Any amount in the HRA (now renamed HCA) rolled over to the next year. (I am not in the companies HSA).

So we would take the debit card for the FSA and put it on file (for example) at Walgreens so all prescription copays would get paid via the FSA card. We would also pay doctor visit deductibles via the FSA card. When the FSA money ran out we would then start paying out of the $1000 in the HCA account. And if there was money left over in the HCA at the end of the year it would roll over to next year.

A couple years back the company started withdrawing prescription copays from the HCA account first (without any choice being available by us to use this first). (So I would get a prescription at Walgreens and they would say I owe $0).

So what ended up happening is the $1000 in the HRA got depleted first – and then *maybe* I had enough expenses after that to deplete my FSA money. (Luckily I did).

Was the company legally allowed to change the order in which they took copays and deductibles? There was nothing said about this in the benefits documentation.

Terry Says

This is strange, and it could just be a “clerical error.” But you should certainly contact the HR department of your company and ask for an explanation. It could have been a problem for you if they didn’t follow their own rules.
And on the off chance that you get the clerk who made the error, just make sure you are talking to the very top person in HR with this issue. You might want to pose it as a significant “risk” to the company if they lack controls over this plan! (Those words should get your complaint elevated to the Audit committee of the board, which is responsible for “significant risks to controls”!



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