The term "Distribution Schedule" on the plan design dictates how funds are disbursed to employees over their benefit year. This field not only defines the frequency but also the amount per distribution, which ultimately adds up to the annual plan allowance.
What is a Distribution Schedule?
A Distribution Schedule refers to the schedule of disbursement of funds within the benefit plan. For instance, consider a plan design with a limit of $1000. The chosen schedule, be it annual, semi-annual, or quarterly, impacts how this sum is allocated.
Annual: If an annual distribution is chosen, employees receive the entire $1000 at the plan's renewal.
Semi-Annual: Opting for a semi-annual schedule disburses $500 upon renewal and another $500 six months later.
Quarterly: A quarterly schedule allocates $250 at renewal, followed by $250 every three months thereafter.
Monthly: A monthly schedule would allocate $83.33 per month to get the full plan limit as close to $1000 as possible (as shown below). Since $1000 isn't perfectly divisible by 12, it has to round down to the closest divisible amount.
The trick when putting this into the plan design is to make sure that the "Total per year" is the amount the employee is supposed to receive throughout the entire year (the sum of all distributions).
Submitting claims against a Distributed Balance:
It's important to note that funds automatically accrue over the selected distribution schedule. This means that if distributions occur more frequently than once a year, there are two primary methods for submitting claims:
a) Per Distribution Submission: A claim that is more than what the employee has available, but is within the plan limit, can be submitted more than once in the benefit year against each distribution. To avoid confusion, ensure that the claimant mentions in the notes section of the claim that they are resubmitting against the new distribution to prevent adjudicators from flagging it as a duplicate claim!
b) Accumulative Submission: Alternatively, receipts can be held until the available balance that covers their cost across multiple distributions has been earned, that way they only have to submit the claim once.
Understanding Carryover
Contrary to common misconception, the distribution schedule doesn't directly correlate with the carryover mechanism in the plan. Instead, the standard function of any distribution schedule on myHSA is set up so that funds consistently accrue based on the chosen schedule, accumulating up to one year. This cannot be turned off, so unused funds within the same benefit year will always accrue until the benefit year is over. On renewal, the distribution schedule will start over.
At myHSA, the "Carryover" feature enables the carrying of unused funds from the previous benefit year into the new one, extending for an additional 12 months.
For example: An employee with a $1000 plan that distributes semi-annually received $500 on Jan 1st 2024 and July 1st 2024. They did not submit any claims in 2024, so in December of 2024 they have a total of $1000 accrued. Their plan allows carryover, so on January 1st, 2025, their $1000 from 2024 goes into "Carryover" and their new distribution of $500 for 2025 is in their "Current" balance. This gives them $1500 total to utilize for 2025.
This can be a bit of a confusing topic, if you have questions please feel free to reach out to support@getmyhsa.com for assistance, or reach out to our live chat in the bottom right hand corner of any myHSA webpage!