Rules for Health Care Reimbursement Accounts in Illinois

Health care reimbursement accounts set aside pre-tax money from wages to reimburse costs not covered by the patient's health insurance. These accounts have become increasingly more popular as employers search for a way to offer competitive insurance plans at a much lower cost to the company.



In Illinois, health care reimbursement accounts included in insurance care options must follow certain regulations.

Deductible

• In Illinois, health care reimbursement accounts typically accompany insurance plans with high deductibles. The accounts help the insured fill the gap between where the medical costs start and where the insurance starts picking up the tab. Pre-tax dollars from an employee's wages are earmarked to cover the deductible or for services that are not covered by the insurance. Common covered procedures paid for by health care reimbursement accounts include eye care exams and orthodontist checkups. According to the Internal Revenue Service, the employer is in charge of deciding if the funds roll over from year to year and how much to place into the account since the accounts are solely funded by the employer.

  Health care reimbursement accounts are like a promise by the employer to the employee that any service rendered will be covered. If there are any unused funds after the end of the benefit year, then the surplus amount is returned to the company. Some companies let the amount accrue from year to year, but if the employee decides to leave, the money from the account rarely goes with him. The only way for the coverage to continue would be if the former employee qualifies to received continued coverage through Consolidated Omnibus Budget Reconciliation Act, or more commonly known as COBRA.

Distribution and Cards

• Distributions from a health care reimbursement account are used to pay incurred medical expenses. If the employer chooses to, debit cards, credit cards and stored-value cards can be given to an employee as a way to pay for the out-of-pocket costs. The employee must use the card only for medical expenses allowed, and any misuse could result in permanent revocation and repayment of any ineligible payments.

New Changes

• In 2011, Illinois law will require a doctor's authorization for patients to buy pain relievers, allergy medicines, diaper rash ointment and other daily ailment curatives with funds from their health care reimbursement account. This change is part of the Patient and Affordable Care Act, which took effect in 2010. A few exceptions include birth control pills, bandages, first aid supplies and reading glasses.

  This law will soon make more changes. In 2013, health care reimbursement accounts will be capped at $2,500 per account. Most accounts now have approximately $3,000 to $5,000 of usable funds. A key aspect of the new law is that the cap will be per account and not per household.