ER defined FSA

[Guest Tfuehrer]

Can an ER define what is reimbursed from an FSA to an EE (via the plan document?).

[leevena]

I am guessing you mean a health fsa, not the dependent care. Eligible expenses are defined by the IRS in 502. However, you may have a situation involving a limited fsa or something to do with OTC drugs.

[jpod]

The ER, through the terms of the written document, can absolutely define what is reimbursable (or not reimbursable), as long as anything reimbursable qualifies as a medical expense under the IRC and meets all other requirements of the Section 125 regulations. The fact that there is employee money involved is irrelevant. With that said, from a risk management perspective, if the ER is going to exclude certain expenses from eligibility it better highlight exactly what those exclusions are in bold print on the election form. In my view, merely stating these exclusions in a separate SPD and not on the same piece of paper used as the election form is asking for trouble.

[leevena]

The ER, through the terms of the written document, can absolutely define what is reimbursable (or not reimbursable), as long as anything reimbursable qualifies as a medical expense under the IRC and meets all other requirements of the Section 125 regulations. The fact that there is employee money involved is irrelevant. With that said, from a risk management perspective, if the ER is going to exclude certain expenses from eligibility it better highlight exactly what those exclusions are in bold print on the election form. In my view, merely stating these exclusions in a separate SPD and not on the same piece of paper used as the election form is asking for trouble.

jpod...I don't believe I am disagreeing with you. My point, which may not be as clear, is to say that the plan must start with the expenses defined in 501. While the employer can eliminate some of the eligible expenses, it cannot go beyond 501 and add ineligible expenses, is this correct?

[jpod]

Leevana: We're on the same page. I wasn't so much commenting on your response as I was attempting to stress the point that the plan document controls (subject to my caveat about risk management), because I was sensing that the OP's question was prompted by some push back from employees.

[Guest larrymurphy]

The ER, through the terms of the written document, can absolutely define what is reimbursable (or not reimbursable), as long as anything reimbursable qualifies as a medical expense under the IRC and meets all other requirements of the Section 125 regulations. The fact that there is employee money involved is irrelevant. With that said, from a risk management perspective, if the ER is going to exclude certain expenses from eligibility it better highlight exactly what those exclusions are in bold print on the election form. In my view, merely stating these exclusions in a separate SPD and not on the same piece of paper used as the election form is asking for trouble.

jpod...I don't believe I am disagreeing with you. My point, which may not be as clear, is to say that the plan must start with the expenses defined in 501. While the employer can eliminate some of the eligible expenses, it cannot go beyond 501 and add ineligible expenses, is this correct?

So, can an employer define the medical expense which will be reimbursed out of the FSA to be expense which is both eligib le 213 expense and also considered to be eligible expense under an employer provide high deductible plan? If yes can the FSA plan document simply refer back to covered expense, limitations and exclusion is the group medical policy?

[leevena]

Yes, the employer can. I don't know the legal answer to the question about having the fsa refer to the group plan, sorry. My guess is that you probably do not want to do that. Seems to me that the information should be in the fsa to make the process easier for those employees who may not take your group plan. But this is just a guess, maybe someone else can answer this part.