FSA Claim Which Spans 2 Coverage Periods

[Guest gaham]

I have a situation where an individual who was a participant in an FSA both last year and this year incurred a medical expense last year but due to consistent screw ups by her regular health insurance provider never knew how much of the medical expense would be reimbursed (and hence how much of the net cost she had to pay) until this year. While I understand that the rules provide that the FSA reimbursement must be made generally for the year in which the medical care was provided and, thus, it may be too late, there is also a substantiation requirement that would arguably prohibit FSA reimbursement until it is known how much, if any, is reimbursable from another plan. Does anyone think it would be permissible to approve the reimbursement of this participant's claim this year?

[g8r]

Personally, I'd be reluctant to pay it this year. I'd attempt to have the employer/administrator grant an exception to the run-out period (i.e., time to submit claims after the end of a year) from the prior plan year. Based on the circumstances, I don't think the IRS would object -- especially since there are no prescribed rules on run-out periods.

[Sandra Pearce]

Our plan would reimburse from the previous year's account (the year in which the medical expense was incurred) if there was sufficient documentation to show that a determination of employee cost could not be made before now AND if the employee had notified the plan of this prior to the normal claim filing deadline. We would not reimburse from this year's plan.