ComplaintsforKapnick Insurance Company

• Initial Complaint

  03/15/2023

  Complaint Type:

  Customer Service Issues

  Status:

  Answered

  More info

  Kapnik failed to close my 2022 fsa account after all funds were used in 2022. This caused a major issue when I started to use my 2023 funds. There were purchases made in 2023 using my 2023 money that the items were return and refunded. All the funds got applied to my 2022 account. Instead of the apporiate 2023. These funds never had anything to do with the 2022 account. Now the 2022 account is due to close today and they are denying me ask to my money. They are not only refusing to put the money in to the apporiate 2023 account. They are also lying to government and having 2023 chargers post to the 2022 account. This is all because they didnt close out an account the had $0. They refuse to fix there system that automatically issues any credits to the oldest account open. In my cases the 2022 account instead of the 2023 account they came out of and need to go back into. This is a governor account fsa that they messed up and now are going to take my money that I contributed and not allow me to use it because of there system errors. They know they have this issue every year but fail to fix it . THIS WHOLE ACCOUNT NEEDS TO BE FIXED FROM THERE NEGLIGENCE AND ALL THE MONEY THAT I CONTRIBUTED FOR 2023 NEEDS TO BE IN MY 2023 ACCOUNT FOR MY USE IMMEDIATELY. I will also be reporting to the government that Kapnik is knowingly misusing fsa funds for apporiate benefit years and refusing customers access to there money.

  Business response

  03/28/2023

  [BBB Transcription via Email]

  Good afternoon,
  
   
  
  We received your inquiry dated March 15, 2023 regarding complaint ID ********.  Below please find our response to the complaint.
  
   
  
  Kapnick Insurance Group is a licensed third-party administrator which administers the flexible spending plan sponsored by the complainant’s employer.  As such, it is our role to process all claims in accordance with the terms of the client’s plan as well as all governing regulations. 
  
   
  
  In this instance, the complainant enrolled in the health flexible spending account (HFSA) for the 2022 plan year, which includes a permissible 2.5 month grace period for participants to receive reimbursement for eligible expenses incurred within the grace period.  In addition, the complainant also enrolled in the HFSA for the 2023 plan year (January 1 – December 31).
  
   
  
  As of the end of 2022, the complainant had a balance of $0 in their HFSA.  The complainant utilized the debit card associated with the HFSA for 2023 expenses and subsequently returned items and was entitled to a refund in the HFSA.  In accordance with standard processing rules and IRS guidelines, the system is programmed at the client level to first apply all debit card transactions to the oldest plan year still open.  Though the complainant had a $0 balance for the 2022 plan year, the account remained open through the end of the applicable grace period (March 15th) for any transaction processing as the cafeteria plan year was not yet closed.  Accounts are not managed on an individual basis as they are part of a larger group health plan.  As a result, the refunds were applied to the 2022 plan year.  We explained to the complainant’s spouse that any funds remaining in the 2022 account as a result of the refunds would be moved to the 2023 plan year balance, which has been done.
  
   
  
  In regard to the denial of claims, Kapnick is following plan provisions and IRS regulations when reviewing claims for payment.  In accordance with the same, Kapnick requires plan participants to substantiate debit card transactions that cannot be auto-substantiated.  Based upon IRS guidelines, our system is able to auto-substantiate copay and deductible amounts (as defined by the plan sponsor’s health care benefit plans) when the merchant or provider is recognized as an IIAS Medical Merchant.  When auto-substantiation is possible, we do not require the participant to provide documentation to prove the expense if eligible for reimbursement under the HFSA. 
  
   
  
  The complainant utilized the HFSA debit card at Wal-Mart, which is not an IIAS Medical Merchant.  Therefore, in accordance with IRS guidelines and plan provisions, Kapnick requested documents from the complainant to substantiate expenses.  Such documents are required to contain the following information: Provider Name, Date(s) of Service, Description of the Service Provided and/or Items Purchased, and Charges Incurred.  After conversations with the complainant’s spouse, we have not yet received sufficient documentation to substantiate the expenses.  Wal-Mart’s system advises that participants will not be required to substantiate expenses, but that is not an accurate statement and does not bind the cafeteria plan or override IRS regulations.
  
   
  
  Lastly, the complainant does currently have additional expenses requiring substantiation.  The complainant utilized the HFSA debit card on five (5) occasions for medical care, and on each occasion the cost included an additional fee Kapnick is required to substantiate.  Specifically, the complainant had a standard plan copay of $10 accompanied by what appears to be a service fee from the provider, making the additional fee ineligible for auto-substantiation.  Though the additional fee for each date of service was nominal, due to previous situations similar in nature that were found to be fraudulent (not involving the complainant) Kapnick does substantiate any additional fees charged by medical providers.  To be clear, the claims are not unpaid, we are simply requiring a statement from the provider substantiating the additional charges.  The substantiation provided by the complainant was a debit card receipt, which does not contain the required data noted above to substantiate the expense.
  
   
  
  Our team continues to work directly with the complainant, as we have over the past few weeks, to resolve the substantiation requests related to the Wal-Mart transactions and the 5 dates of service noted in the preceding paragraph.  Otherwise, the complainant does not have any other denied claims or pending substantiation requests at this time.
  
   
  
  Please note that the complainant’s 2023 HFSA had a $0 balance prior to the transfer of the $66.89 refund balance from the 2022 plan year.  The complainant has submitted additional expenses for reimbursement, and if approved those expenses will exhaust the balance of $66.89.
  
   
  
  We hope this information is helpful and clarifies that Kapnick is 1) following the terms of the plan sponsor’s cafeteria plan, 2) following all applicable IRS rules and regulations, and 3) working with the complainant to resolve their questions, concerns and claims.
  
   
  
  Should you have any questions or need additional information, please do not hesitate to contact me.
  
   
  
   

  Customer response

  04/04/2023

  
  Complaint: ********
  
  I am rejecting this response because:
   I Have provided clear proof from the doctor about .37 fee and they are still rejecting my claims. Also they did misallocate my funds and I have not had access to them since March 15th. These funds were to be used for 2023 expenses because of there negligence and in ability to do there job I have not been able to use the funds they way they were intended since March 15th. So yeah a bunch of lies and mishandling of my account. 
  Sincerely,
  
  *** *******

  Business response

  05/01/2023

  [BBB Transcription via Email]

  
  Good afternoon,
  
   
  
  Kapnick Insurance received the letter advising of the customer’s rejection of our initial response to complaint ID ******** on April 24, 2023.  At this time, it appears BBB has closed this complaint but we wanted to ensure a response is filed.
  
   
  
  As previously indicated, the complainant needed to submit documentation for the $0.37 service fee charged by their provider in order to substantiate the Health FSA debit card transaction.  This request was made by Kapnick in our role as the third-party administrator of the Health FSA in accordance with IRS regulations and to ensure there was no fraudulent activity.  The complainant submitted the requested documentation from the provider and the $0.37 service fee was approved.
  
   
  
  Further, the Wal-Mart claims previously denied due to lack of substantiation were re-reviewed.  The list of IIAS Medical Merchants, which a provider must be for a debit card transaction to be approved without substantiation, is updated on a regular basis.  As a result, the Kapnick team reviews the list on a regular basis as well, especially when a claim has been denied due to lack of substantiation.  Upon our last review, we were able to locate the Wal-Mart store numbers where the complainant’s debit card transactions were completed.  Those stores were not previously identifiable by store number.  As a result of this update, it was determined that the transactions could be approved.
  
   
  
  At this time, the complainant has successfully substantiated claims sufficient to deplete their funds in both their 2022 and 2023 Health FSA accounts.  Therefore, we can confidently state that the complainant’s concerns have been addressed and resolved.
  
   
  
  If you have any further questions or concerns, please do not hesitate to contact us.

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