Question regarding FSA reimbursement and foreign exchange rate

[Guest MSMA]

We administer FSA accounts and several participants live along the Canadian border. Are there any regs etc. which address the issue of the currency exchange rate? For example, one participant purchased their medications in Canada because their health insurance does not provide coverage for prescriptions. They submitted their "tag" for reimbursement and stated that the funds indicated were American funds. However, a call to the pharmacy indicated that the amount on the tag was in fact Canadian. Of course, this greatly reduced the amount of the reimbursement. So --- the question is --- how should this problem be addressed? Who should be responsible for calculating the exchange and what would be considered appropriate documentation for this?

[Guest pineapple]

I seriously doubt there is any guidance on currency exchange rate and FSA's. Notwithstanding that, there really isn't any issue here. You indicate that the participant paid for the medication with Canadian funds. Since you know the date of purchase, convert the amount the participant paid (in Candadian dollars) into U.S. dollars based on the exchange rate in effect on the date the medication was purchased. Thus, the participant will be reimbursed for the actual U.S. dollar amount that they spent on the medications.

As far as documenting the reimbursement, I would just have the plan representative who contacted the pharmacy write a statement that the amount indicated on the "tag" was Canadian, based on the call to the pharmacy. The statement should be retained with the other documentation.

If the participant has a problem with the reimbursement amount, the plan can require the participant to prove that the amount indicated on the "tag" is U.S. dollars versus Canadian dollar.

To avoid this problem in the future, the plan document could be amended to provide that reimbursements will only be made for items purchased/services performed in the U.S.