When processing transactions, some items or services may be eligible under more than one pre-tax benefit. The system will pull funds based on payment order settings so if there’s insufficient funds in one account, the transaction can be completed using funds from another account.
The payment order is:
FSA > LPFSA > HSA > DCFSA > Transit > Parking
For example, if someone goes to the dentist, that service is eligible under their LPFSA and HSA. The total amount is $500 but there is only $400 in their LPFSA. The transaction will pull $400 from the LPFSA account first then cover the remaining balance with money from their HSA.
There are instances where merchants are not categorized under merchant category codes (MCCs) correctly.
For example, if someone goes to the hospital for a dental emergency it may be assumed that the expense will be covered under an LPFSA. However, hospital MCCs are not compatible with LPFSA eligibility. In this instance, the transaction will pull from their HSA only.
In this case, if you’d like to apply this expense to your LPFSA instead of HSA follow the steps below.
- Download and complete this form
- In section 2, select ‘Return of Mistaken Distribution’ and select tax year
- Mail the completed form to the address listed at the top of the form
- File a manual claim under the correct account that should be charged, including the receipt