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Flexible Spending Account IRS Restrictions and Regulations

The government imposes restrictions on FSA's to give you pre-tax advantages.

  • The IRS requires that any unused portion of your account balance remaining at the end of the plan year plus the grace period (September 15) is forfeited.  It is important to estimate your expenses carefully.
  • Participants cannot receive payment from any other source for reimbursement amounts requested.
  • Participants cannot claim reimbursed expenses for the purpose of income tax.
  • Claims cannot be reimbursed until the service is rendered (regardless of when payment is made).
  • Cosmetic procedures are not eligible (for example, teeth bleaching, weight reduction,  hair loss, face life, etc)
  • A healthcare account cannot be used to reimburse dependent care expenses.
  • A dependent care reimbursement account cannot be used to reimburse medical expenses.
  • Elections may be changed once a year during the open enrollment period unless you have a life status change (marriage, divorce, birth or adoption of a child, death of spouse or dependent) or employment status change (change in spouse's employment, full-time vs part-time, unpaid leave of absence).
  • You cannot transfer funds between  a healthcare account and a dependent care account.
  • Participants with a healthcare expense account can request reimbursement for incurred expenses, up to your annual contribution, effective the first day of the plan.
  • Unlike the healthcare FSA, dependent care accounts are not "pre-funded".  You will only receive reimbursement for the amount deposited into your account as of the reimbursement date.
  • For any medical or dental claims - you must send a copy of Explanation of Benefits (EOB) from your insurance company showing how each claim was processed.
  • For any prescriptions, services or supplies - you must provide a detailed/itemized statement and/or receipts.