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I have roughly $1500 in hospital bills. I called them and said that is too much for me to pay right now and they offered to split the payments over 12 months.

Can I immediately submit the bill to my 2015 FSA even though technically I will still be making payments on it until early 2016? Or do I need to pay off the remainder of the balance when I get the money from my FSA?

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First off, medical FSAs will let you withdraw the entire FSA right away, even if you haven't contributed the entire amount yet. So you may not need to do a payment plan. If your FSA comes with a debit card, you can just pay it all off with that (if you have $1500 in the account) and not worry about this. You don't have to have the funds deposited in the FSA to spend them (up to your annual contribution amount, of course).

Second, medical FSAs that do not come with a debit card repay you for what you have already spent, not for what you owe; so you're correct, you'll have to pay it first then get repaid from the FSA. The date you incurred the expense determines when it's eligible, not when you repaid it; but you will have a deadline (typically a few months after your end of year, which is usually either end of calendar year or end of the grace period in march) to apply for reimbursement; check your plan details for more detail. It's also possible the FSA might have some method of paying expenses directly via check, though none of the ones I've been in have that option.

  • Yes I have a crappy FSA provider that hasn't given me a debit card. So you are saying the date I incurred the expense is when it's eligible. And I have no FSA-imposed deadline to actually pay it beyond the provider's deadline. – Philip Apr 1 '15 at 15:10
  • You have a deadline, but it's fairly far out - well into 2016. You should ask your FSA administrator or look at your plan documentation for specifics. My medical FSA for example I have a grace period to 3/15/2016 (so 1/1/2015-3/15/2016 claim date) and then a claim submission deadline of 5/31/2016; so if I had a hospital event in 2/15/2015 I would have until 5/31/2016 to submit the receipts. – Joe Apr 1 '15 at 15:51
  • I'm not asking about the deadline to submit receipts, I'm asking if I have a deadline to actually pay the bill I received FSA money for. i.e. if the government will get upset if I take tax free money and essentially use it as a loan for over a year until I actually pay off the medical bill. – Philip Apr 1 '15 at 16:03
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    @Philip If you haven't paid the bill, you can't submit the receipt for the bill. Hence that being important. You can't submit the cost of the procedure: you must submit the receipt for having paid for the procedure. That's the first sentence in the second paragraph. – Joe Apr 1 '15 at 16:04

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