Question regarding reimbursement from cafeteria

[Guest josalero]

Recently, some of the claims I submitted for reimbursement under my cafeteria plan were denied because of the date of service.

I was under the impression that the expenses became deductible when I paid them. The dates of service on these medical bills were December of 2000. However, I did not pay my portion due until 2001 therefore I turned them in to be reimbursed under the 2001 calendar year.

They were denied due to date of service being the prior year.

Is this right? My insurance company never gets around to processing these claims for several months after they are incurred, so I don't even know how much I'm going to owe as a balance due. So I had nothing to submit last December. This is telling me that if I wish to deduct an expense I incur in December, I must pay it in full and then wait for reimbursement of the portion that insurance paid? Because if I turn in the entire amount, that would be fraudulent, as far as I'm concerned.

Help?

Thanks much!

Jo

[Mary C]

Jo -

when you say denied under your cafeteria plan, I am assuming you mean a flexible medical spending account under your cafeteria plan. While you can DEDUCT medical expenses from your tax return in the year in which you pay for them, REIMBURSEMENT from a flexible spending account is based on the date your incur the expense. While a copy of what the insurance company is paying may be required so you do not claim a reimbursement for more than what you are acutally out of pocet for, it is still based on the date services were received. Also, you can't deduct on your tax return the same expenses you claim from your flexible spending account. Check your summary plan description for a full explanation of eligible expenses, documentation needed for reimbursement and how long you have to file claims after the end of the plan year.

[Guest josalero]

Sorry, wrong word there, substitute "reimbursement" for "deduction." Sorry abou that!

I understand that I cannot deduct from my income taxes expenses that are reimbursed by my flexible spending plan.

Nowhere in the summary plan description does it state that the expenses need to be incurred during the calendar year, I guess we are just supposed to know that? Apparently, I wrongly assumed the rules were the same as those that apply to tax returns.

Thanks much for your input.

Jo

[GBurns]

A lot of what claims administrators or FSAs do is very questionable. Look at the cited case and compare your situation to it. If you think it is comparable give a copy of it to the Claims Administrator and hint that you are considering pursuing in based on the case such as this. There are a number of other similar cases. Let us know the outcome.

A Lesson In Drafting: Court Orders Health FSA to Reimburse Expenses Paid But Not Incurred During the Plan Year

[Grande v. Allison Engine Co., Inc., Case No. IP00-0378-C-H/G (S.D. IND. 2000)]

For a copy of the case: http://www.insd.uscourts.gov/opinions.htm (scroll down; the case is listed under Judge Hamilton).

[Guest josalero]

Thanks so much, GBurns - that sounds like exactly what I need. However, I am unable to find that particular case under judge Hamilton or any of the judges. Is there somewhere else I might find it?

Thanks much!

Jo

[GBurns]

I see that they remove the older files to the clerks office for archiving. Unfortunately the document is in PDF format so I cannot attach it to this post. If you send me an email with a return email address I will send you the PDF file with the text of this case. In the meantime here is a summary that was done by Spencer one of the leading information publishers in the industry, their website is www.spencernet.com

[Guest josalero]

Thank you so much, I am sending you my email address.

[Guest cmlurch]

Sorry to say that reimbursement plans look at the incurred date, not the date you actually pay for the expense. So, since they were incurred in 2000 they would not be paid in 2001. Now, if you had a reimbursement plan in 2000 then they should've been reimbursed if you had money left in your account.

[Guest cmlurch]

Sorry I didn't see the conversation going on here. I didn't have right information.