A loud voice projects through the phone: “But it’s MY money!” It sounds like a scene from the latest crime drama. But it’s actually an (understandably) upset caller talking to a customer service representative at a third party administrator (TPA.)
While it may seem like TPAs (such as Benefit Resource (BRI)) are holding your money hostage, we promise that is not the case. We are not in the business of taking hostages. (At least, most of us aren’t. We hope.) That includes not taking and holding your hard-earned money.
If you feel you can give us a fair trial, we would like to clear things up for TPAs… once and for all.
What leads to a ‘hostage’ situation?
There are two likely reasons you might feel your money has been held hostage:
- You were asked to provide a receipt for an expense.
- You submitted a claim and it was denied (again).
Let’s start with why you might have received a request from BRI to provide a receipt.
Why Did I Receive a Receipt Request?
When asked to supply a receipt, you are being asked to verify that money you’ve already spent through your benefits card was for eligible medical expenses.
While we agree this might be an inconvenience, it is hardly a hostage situation. By virtue of that fact that the money has already been spent, at this point, we are working with you to determine if it was spent on an eligible item. TPAs do not have the power to determine what is or is not eligible. That power lies exclusively with the IRS.
As such, we maintain our humble positions as messengers of what is and is not eligible. So, the burden falls on us to notify you as to whether or not the expense in question is eligible. And if your expense might not be eligible according to the guidelines set forth by the government, we are required to request that you provide a receipt.
A close cousin of receipt requests, claim denials can also be viewed as a “hostage” situation.
Why Was My Claim Denied?
You submitted a claim and included all the information, but it was still denied. Clearly, the TPA you’re working with has it out for you. The situation has all the makings of a heated hostage scenario. But let’s take a step back and try to determine why the claim might have been denied.
Denied or Incomplete?
The first place to look is the denial communication. In many cases, the claim might have been incomplete, rather than denied. Two of the main culprits of an incomplete claim are 1) forgetting to provide a receipt, or 2) providing a receipt that doesn’t contain the required information. A claim must always indicate the who, what, where, when and how much. Make sure your ask yourself the five basic questions to ensure receipt acceptance before you submit a claim.
If your claim was in fact denied, you might be ready with a guilty verdict, but our defense has not yet rested its case. Next, verify the expenses that are eligible under your plan. Check your plan highlights if you are unsure. Just because one or two expenses on your claim were denied does not mean the other expenses submitted won’t be covered.
We are not paid to keep your money, nor do we get to keep unused funds.
We are not an insurance company. While it is possible for an insurance company to make more money by not paying claims, it doesn’t work that way for TPAs. It is a case of mistaken identity or guilt by association.
We are an administrator of pre-tax benefits. We, like most TPAs, are paid a small monthly administration fee by the plan sponsor (or employer). While the TPA generally holds a portion of FSA funds at any one time, those funds are used to pay ongoing expenses. At the end of the plan year, the TPA reconciles the plan – like balancing a checkbook. Any excess funds (meaning funds you don’t use) are returned to the plan sponsor, and they decide what happens with it. Typically, excess funds are used by the employer to offset any losses the employer may have experienced from an employee that left prior to funding the plan.
We have an obligation to uphold the law.
We are hired by the plan sponsor to ensure the plan is compliant with all regulatory requirements. In the case of an FSA, that means expenses must be substantiated (verified) as eligible. It would certainly be easier to simply send you money without any review process, but unfortunately, it doesn’t work that way. Your FSA falls under the IRS, and both your employer (aka the plan sponsor) and the TPA could be audited.
If we’re audited, we’d likely be asked to prove procedures and documentation requirements were in place ensuring that all expenses paid were eligible. If anything were found non-compliant, the entire plan would in jeopardy. It would no longer be about your one claim, but the entire plan could be determined as non-compliant.
Employees would lose the benefit, and employers and the TPA would likely be fined. No one wins.
Closing Arguments
We don’t deny that receipt requests and claims submission can be frustrating at times. We’re always looking for ways to make it easier on participants, but at the end of the day, we’re bound by laws and have an obligation to uphold those laws.
We know you recognize the value of pre-tax benefits and want to ensure these benefits continue to be available. We’ll do our part by upholding the law and trying to clearly explain what you need to do. We’re on your side.
The defense rests its case.
