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Flexible Spending Accounts
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Medical Expenses Reimbursement Account

       
           
Medical Expenses Reimbursement Account (MERA)
           
Tax Advantage and Effect on Other Benefits
  You can establish a MERA by authorizing a reduction in your salary up to $7,200 a year. This amount then is used to pay eligible medical and dental expenses. Because money goes into a MERA before income or Social Security taxes are withheld, you save money by paying fewer taxes. Depending on where a participant lives, this money may be exempt from state and local taxes as well. The MERA plan is administered by Wesleyan.
           
  Participation in a MERA does not affect other benefits that are based on salary. These other benefits will continue to be calculated on salary before deductions are made.
           
Eligible Medical and Dental Expenses
  Any medical and dental expenses the Internal Revenue Service considers tax deductible are eligible for reimbursement from a MERA if the participant pays them and does not deduct them on a tax return and if they are not reimbursable under an insurance plan. Even if a family member is not covered by a Wesleyan medical or dental plan, his or her medical and dental expenses are eligible for reimbursement if they meet the above conditions. Examples of eligible expenses are:
           
  •  Deductibles and coinsurance not paid by a medical or dental plan;
  •  Vision care, including exams, prescription eyeglasses, and contact lenses;
  •  Hearing examinations and hearing aids;
  •  Weight-loss programs prescribed by a doctor for a specific ailment;
  •  Installation and operation of a non-permanent air conditioner to relieve an allergy or heart condition, if prescribed by a doctor;
  •  Vitamins and dietary supplements prescribed by a doctor;
  •  Doctor prescribed over the counter medications outlined by the IRS;
  •  Smoking cessation programs and related prescription drugs; and
  •  Other medical expenses that qualify as federal income tax deductions.
           
  Any determination of whether a claimed expense is eligible for reimbursement is subject to IRS review. IRS determinations govern the plan.
  To view a full list of eligible expenses please click the following: IRS Eligible Expenses Website
           
  NOTE: Beginning January 1, 2011, FSAs cannot reimburse for non-prescribed drugs or medicines except insulin. The IRS will allow plans to reimburse expenses for prescribed, over-the-counter (OTC) drugs and for non-prescribed medical equipment and supplies.

The new standard applies only to purchases made on or after January 1, 2011, therefore, claims for medicines and drugs purchased without a prescription in 2010 can still be reimbursed. Expenses for OTC drugs purchased prior to December 31, 2010 that are submitted by March 31, 2011 will be reimbursed without a prescription. Expenses for the 2010 year FSA balance must be purchased prior to March 15th and claimed by March 31st. If the 2010 funds are used in 2011 during the run-out period, OTC products will require a written prescription. Items that are not drugs or medicines, such as medical supplies and diagnostic devices are not impacted by the change the tax treatment of non-prescribed OTC drugs. These types of expenses continue to qualify for reimbursement to the extent they meet the definition of medical care in the Tax Code.
           
           
Establishing or Changing a MERA
  If you are eligible to participate in Wesleyan medical and dental plans, you may open a MERA either during your first 30 days of employment or during open enrollment. MERA’s require annual enrollment. You must enroll annually during open enrollment, either to continue the same deduction or to increase or decrease it. IRS regulations prohibit MERA changes at other times except during the 30 days following a change in your family status, e.g. by marriage, divorce, death of a family member, birth or adoption of a child, termination or commencement of spouse's employment, or significant change in spouse's medical insurance coverage.
           
Deciding How Much to Contribute to a Reimbursement Account
  You may choose to put any amount between $120 and $7,200 a year in a MERA. The amount should be based on an estimate of eligible expenses likely to be incurred during the year. One-twelfth of this amount will be deducted from your pay each month.
           
Example of How a MERA Works
  The example below shows how the plan would work for someone earning $50,000 a year who set aside $2,400 a year and used $2,400 for eligible expenses.
   
  With MERA Account Without MERA Account
Annual Base Salary $50,000 $50,000
Minus MERA Amount 2,400 0
 
Sub-total Taxable Income 47,600 50,000
Minus Estimated Federal Income Tax 13,328 14,000
Minus Social Security Tax 3,641 3,825
Minus Health Care Expenses 0 2,400
 
Net Pay $30,631 $29,775
Tax Savings $856  
           
Unused Account Amounts
  IRS regulations for MERA include a "use-it-or-lose-it" provision. Any MERA funds not used to cover eligible expenses incurred during the plan year are forfeited. You can reduce your risk of loss by careful planning and by limiting your MERA contributions to predictable medical and dental expenses.
           
Applying for Reimbursement
  You will be reimbursed for eligible expenses incurred through March 15 following the policy year provided reimbursement claims are submitted by April 15. Submit reimbursement claim forms, together with receipts, to Human Resources. Claims can be submitted only for cumulative amounts of $50 or more, except for your last submission of the plan year, when no $50 minimum applies. Claim forms are available here or in Human Resources.