• Page :
  • 1
  • Text Only
Voting History
rated:
I realize I am going out on a limb looking for some experts to "spoon feed" me, but I will at least say I've tried searching Google and FW, but can't get a clear understanding of the answer.

My Sig other has just incurred about $2-4K in medical expenses due to a surgery. (We haven't paid any of it yet). I've been trying to verify that it is too late for creating an FSA to be helpful. (Majority of expenses have already been incurred)


http://www.irs.gov/pub/irs-pdf/p969.pdf Pub969 page 16

"A cafeteria plan offering a health FSA must be amen-
ded to specify the $2,500 limit (or any lower limit set by
the employer). While cafeteria plans generally must beamended on a prospective basis, an amendment that isadopted on or before December 31, 2014, may be madeeffective retroactively, provided that in operation the cafe-
teria plan meets the limit for plan years beginning after
December 31, 2012."

"Generally, distributions from a health FSA must be paid
only to reimburse you for qualified medical expenses you
incurred during the period of coverage. You must be able
to receive the maximum amount of reimbursement (the
amount you have elected to contribute for the year) at any
time during the coverage period, regardless of the amount
you have actually contributed. The maximum amount you
can receive tax free is the total amount you elected to con-
tribute to the health FSA for the year."

Is the coverage period Annual or does it start when the plan is set up? I'm guessing it's too late in our case, as I'm sure everyone would do this after incurring medical expenses.


More specific details: Sig other broke collar bone in personal accident on property belonging to a friend of a friend. (Not auto insurance related). Collar bones are often not treated with surgery, but in this case it would not have healed properly on its own. Sig Other works for a small business that provides health insurance, but over the last year or two has switched to a plan with a $1000 deductible (Just under the amount required to qualify for an HSA). Pointless Emergency room visit + surgery (& Painkillers) = $3000 in copays and deductibles. Together we make $40000-$45000 per year.

Doesn't look like much, or any of the amount is going to be over the threshold to be tax-deductible. Looks like we're 100% out of pocket for the costs, but I wanted to check here first. - It does look like another surgery will be required to remove a loose pin, but I have no idea how much it will cost since deductible has already been met. Otherwise our medical expenses has been very low.

Thank You for all the good advice I've found on these forums in the past! (I just recently increased my Auto insurance limits and added uninsured motorist thanks to SIS.. Doing this cost me ALMOST NOTHING!)

Updates: General consensus is that submitting a claim prior to start date could work, but it is probable that it will be denied. I've also found that you may not be able to start a FSA mid-year without a qualifying life event.

Health insurance links:

HSA FAQ: http://www.fatwallet.com/forums/finance/542257/?start=0

FSA Dollars: http://www.fatwallet.com/forums/finance/1261432/

Member Summary
  • Also categorized in:
Thanks for visiting FatWallet.com. Join for free to remove this ad.

You need to have a life-time event to create an FSA. If you did have the life time event and wondering if you can get reimbursed for expenses that were incurred before the creation of the FSA, the answer is "yes", as long as the expenses were incurred in the calander year.I know this because of personal experience.

Veeekay said:   You need to have a life-time event to create an FSA. If you did have the life time event and wondering if you can get reimbursed for expenses that were incurred before the creation of the FSA, the answer is "yes", as long as the expenses were incurred in the calander year.I know this because of personal experience.
This is a bit off... If the expense is incurred prior to the effective date of the FSA you CAN NOT use the FSA for that expense. I know this because of 10+ years of HR experience.

Short answer: You are SOL.

tennis8363 said:   Veeekay said:   You need to have a life-time event to create an FSA. If you did have the life time event and wondering if you can get reimbursed for expenses that were incurred before the creation of the FSA, the answer is "yes", as long as the expenses were incurred in the calander year.I know this because of personal experience.
This is a bit off... If the expense is incurred prior to the effective date of the FSA you CAN NOT use the FSA for that expense. I know this because of 10+ years of HR experience.


If what you said is true, I guess I lucked out then.

DELETE - MULTIPLE POST

Veeekay said:   tennis8363 said:   Veeekay said:   You need to have a life-time event to create an FSA. If you did have the life time event and wondering if you can get reimbursed for expenses that were incurred before the creation of the FSA, the answer is "yes", as long as the expenses were incurred in the calander year.I know this because of personal experience.
This is a bit off... If the expense is incurred prior to the effective date of the FSA you CAN NOT use the FSA for that expense. I know this because of 10+ years of HR experience.


If what you said is true, I guess I lucked out then.

Well, I know this sounds extreme, but you just committed tax fraud. Just because you can do it doesn't mean it is legal. A lot of what goes on in the FSA and HSA accounts are open to fraud and mistakes. You will only get caught if audited by employer/insurance carrier/IRS, etc.

tennis8363 said:   Veeekay said:   tennis8363 said:   Veeekay said:   You need to have a life-time event to create an FSA. If you did have the life time event and wondering if you can get reimbursed for expenses that were incurred before the creation of the FSA, the answer is "yes", as long as the expenses were incurred in the calander year.I know this because of personal experience.
This is a bit off... If the expense is incurred prior to the effective date of the FSA you CAN NOT use the FSA for that expense. I know this because of 10+ years of HR experience.


If what you said is true, I guess I lucked out then.

Well, I know this sounds extreme, but you just committed tax fraud. Just because you can do it doesn't mean it is legal. A lot of what goes on in the FSA and HSA accounts are open to fraud and mistakes. You will only get caught if audited by employer/insurance carrier/IRS, etc.


Well. That was a few years back. I didn't know any better. Atleast the OP is not sure as what to "period of coverage" meant. I took it to mean the calander year. I submitted it. The employer/insurance carrier refunded it. I did not falsify the date of expense or the amount. If the IRS were to come after me, I will have to pay taxes on the amount. Big deal.

I might have found what caused my confusion. It looks like most FSA's have to be enrolled at the end of the year for the following year.
Perhaps if we had already had an FSA with a nominal amount going in we might have been eligible to increase our amounts mid-year and been covered (At least that's what it looks like according to the IRS document. I don't know if most companies actually allow this. - Also the IRS only allows this through next year.)

Thanks everyone for your help.

I don't have any lifetime events. But I thought I'd mention I found info that states for certain events the effective date can retroactive to the date of the event. (Having a child). I wonder if that was the lifetime event for Veeekay?

https://www.fsafeds.com/forms/qscfact.pdf

the short answer is NO. according to my experience
i switched job mid 2012, and signed up for FSA after i joined the new company.
i tried to claim medicial expense occured in first half of 2012.
they rejected the claims.

Sig other broke collar bone in personal accident on property belonging to a friend of a friend.

F of a F's property insurance carrier claim, premises liability.

Kid trips on the front steps, knocks tooth out, covered.

Neighbor slips on the icy sidewalk, breaks a hip, covered.

Sig other breaks collar bone doing....whatever..., covered.

Legit claim.

theblenny said:    Sig other broke collar bone in personal accident on property belonging to a friend of a friend.

F of a F's property insurance carrier claim, premises liability.

Kid trips on the front steps, knocks tooth out, covered.

Neighbor slips on the icy sidewalk, breaks a hip, covered.

Sig other breaks collar bone doing....whatever..., covered.

Legit claim.


Thanks the Blenny. I realize previous post was vague. The property was owned by the Parents of Office Manager's Boyfriend. Filing claim might have impact on Sig Other's work relationship. - Sig Other is friends with Office Manager and both Coworkers. I agree with your advice, and will pass it along.

(As we know some of the best advice we see here, doesn't get followed because of pride, fear, laziness, etc.)

Also I don't know what bearing this would have, but this is a Hunting Property. (Since we don't know them, I have no idea if they have insurance on that specific property.) I realize Home Owner's Insurance is fairly wide reaching, but not familiar enough for this situation.

tennis8363 said:   Veeekay said:   If what you said is true, I guess I lucked out then.
Well, I know this sounds extreme, but you just committed tax fraud. Just because you can do it doesn't mean it is legal. A lot of what goes on in the FSA and HSA accounts are open to fraud and mistakes. You will only get caught if audited by employer/insurance carrier/IRS, etc.


What you say may be true - I read IRS Publication 969 and they don't clearly explain the rule:

http://www.irs.gov/publications/p969/ar02.html#en_US_2012_publin...

theirs said: Generally, distributions from a health FSA must be paid only to reimburse you for qualified medical expenses you incurred during the period of coverage. You must be able to receive the maximum amount of reimbursement (the amount you have elected to contribute for the year) at any time during the coverage period, regardless of the amount you have actually contributed. The maximum amount you can receive tax free is the total amount you elected to contribute to the health FSA for the year.

What I wasn't able to find in that document is a definition of "period of coverage" or "coverage period" or anything similar. If you ask 100 HR executives you'll likely get 10 different answers and I know from personal experience that there is frequently no hard stop keeping you from doing this. Which if it is against the rules is ironic considering every third party FSA processor I've ever dealt with denies for the most frivolous of reasons. I just had a claim denied because I sent a receipt from the dentist and not an "Explanation of Benefits" form. They said that I had to sign a statement that insurance would not reimburse me for it. Which is stupid because their claim form already makes me sign that I am not being reimbursed in any way by any party.

Now, having said that I think that working for a company from 1/1 to 12/31 but signing up for an FSA on 3/1 and then claiming expenses from 2/1 is about as dangerous as speeding 5 miles over the speed limit so to throw around "tax fraud" is (as you said) extreme.

Did your SO fill out a form w/a explanation of the accident for his health insurance company? If so, SO's health insurance will go after the homeowner for their portion of the medical expense, most likely.

StartByServingOthers said:   
My Sig other has just incurred about $2-4 in medical expenses due to a surgery. (We haven't paid any of it yet). I've been trying to verify that it is too late for creating an FSA to be helpful.


Damn. And I thought I was frugal.

Short answers to all relevant questions, asked and unasked, in OP's post:

$2-$4K for surgery is a bargain.
Two people working who COMBINED make $40-$45,000 is very low.
FSAs are a great resource, but can't be used retroactively.
The person to ask about your job benefits is your HR office or boss, not us.

Also I don't know what bearing this would have, but this is a Hunting Property. (Since we don't know them, I have no idea if they have insurance on that specific property.) I realize Home Owner's Insurance is fairly wide reaching, but not familiar enough for this situation.

I slung P&C insurance for nearly a decade, but no more , and would assume there is coverage.

Any agent fresh out of qualifying classes would understand the principal of extending liability. A simple endorsement with minimal cost would extend homeowners liability to another property, vacant ground being a good example. While underwriting guidelines vary for such an endorsement, it is not uncommon to offer this to a customer with such a property. A well seasoned agent would pick this exposure up before the customer left the seat. For less than $50 a year (in my market) you could easily extend the homeowners liability to a non-contiguous property.

If I had to get a couple of stitches and a tetanus shot, I would probably eat the cost. But with a major medical situation and four digit bill, an inquiry might be prudent IMO.

marg1011 said:   Did your SO fill out a form w/a explanation of the accident for his health insurance company? If so, SO's health insurance will go after the homeowner for their portion of the medical expense, most likely.

No one has asked where the accident occurred and insurance has already payed for most of their share.



Thanks i3ighead. I am very frugal, but if it was $4 or less I might go ahead and bite the bullet and pay (using CC for CB of course). I updated Op to add K to the amounts. Kanosh is right, our combined income is very low, but we also live in a low cost of living area. (Our 5 year old $120,000 1300sf(+2Car) home has $80,000 remaining 2 years after purchase.) Expenses like these that are expensive across the board, might be a good argument toward higher income / cost of living areas. - Cost has been between $6-10k, I listed our expected payment in Op.
It amazes me how much things cost with insurance and how much insurance / medical places screw you. (Your doctor is in our network, but the surgery center he performs all his surgeries at is not in our network. Therefore anesthesia and other expenses are covered as out of network expenses, with higher co-pays. As far as we've been able to find, no Surgery Center in our area or even our state is covered "in-network" with the insurance.)

Note: Sig other will still need surgery to remove the screws (We found this out since posting this thread. Doctor didn't tell us much initially. Right now we're hoping the screws stop working their way out, so 2 more surgeries are not needed. - One to put back in, then one to take them out) .
Regardless of coming expenses, from what I've read so far, it doesn't look like we can sign up for a FSA mid year anyways, because we haven't had a life event this year. (No children, and had Jobs / marriage for 3+ years.)

Let me add one more little piece: even if you can't use an FSA for these expenses, you can still deduct medical expenses on your annual taxes (if they exceed a certain percentage of your income, if you itemize, if you have receipts, etc etc). all the hoops you have to jump through make an FSA preferable, but if you meet all the qualifications, you can still deduct those expenses.

Whatb the heck. Since Obamacare lets people pay a small "tax" if they decide not to acquire health insurance when they don't really need it, then guarantees their "right" to purchase health insurance when a need comes up (and I suppose, then drop it, and wait until they need it again to sign up again), why not allow people to sign up for other things after the need arises. FSA to pay already incurred expenses? Sign up for for fire insurance using neighbor's wifi and Ipad you grabbed when running out of your burning house. Sign up for life insurance to pay for a dead relative's funeral? Spend $16,500,000,000,000 and growing, then have our children pay it off. Oops. I think that one already happened.

soundtechie said:   Let me add one more little piece: even if you can't use an FSA for these expenses, you can still deduct medical expenses on your annual taxes (if they exceed a certain percentage of your income, if you itemize, if you have receipts, etc etc). all the hoops you have to jump through make an FSA preferable, but if you meet all the qualifications, you can still deduct those expenses.

Thanks, I mentioned my income and expenses several times through the post, but I never bothered to do more than estimate the minimum required for deduction since it's clear most won't be deductible. $3300 is the starting thresh-hold in my case. It looks like any additional expenses will be deductible if we are able to exceed the standard deduction. (Because our house isn't expensive we never get close). I imagine most people who have medical expenses over 7.5% of AGI are hurting financially (and probably literally) worse than us unless they have a lot of assets.

All excellent ideas cows123.



Disclaimer: By providing links to other sites, FatWallet.com does not guarantee, approve or endorse the information or products available at these sites, nor does a link indicate any association with or endorsement by the linked site to FatWallet.com.

Thanks for visiting FatWallet.com. Join for free to remove this ad.

TRUSTe online privacy certification

While FatWallet makes every effort to post correct information, offers are subject to change without notice.
Some exclusions may apply based upon merchant policies.
© 1999-2014