Can employer-funded FSA define and limit the medical expenses that can

[Guest Dolores Lawrence]

Various research materials indicate that a Health FSA can be 100% employer funded. Can the Health FSA document define and limit the expenses to be reimbursed? For example, could the plan say that the first $1,000 of out of pocket expenses due to hospitalization are reimbursable by the plan? (All other medical expenses would not be reimbursable by the plan.) The employer does not want any carryover provisions (that an HRA plan could provide.)

The other option would be to use an HRA document and specify no carryovers. Client would prefer this to be part of the existing 125 arrangement and not a separate HRA.

[GBurns]

Since this is going to be 100% employer funded, why not just use a straight section 105 Medical Expense Reimbursement Plan?

If you are using an FSA, I have not seen anything in the IRC or Treas Regs that would prohibit limits on what is eligible for reimbursement.

You can have an FSA that does medical only, you can have an FSA that does Dental only, you can have an FSA that covers the PPO plan related expenses but not the HMO, so logically you could restrict what is in a medical only FSA.

[Guest mab]

GBurns is correct.

I have limited reimbursements in numerous plan documents that have passed through the review of IRS auditors.

[smm]

I agree with the previous comments. It is not unusual for an employer to limit what expenses are reimbursable. For example, I have seen several FSAs that are maintained by religious-related organizations (or board members who themselves have strong religious beliefs) that specifically exclude medical abortions.