Does WageWorks / FSA verify your claim submissions with your health provider?

Question

I underwent a medically necessary treatment with my healthcare provider as soon as my insurance went into effect for the current period, and paid via an FSA card.

Shortly after, I was required to submit proof of my claim as they need to verify 100% of card transactions, so I gathered all the documentation and had the licensed practitioner complete a letter.

This took place early January 2016 (I'm still in the same FSA period) and I just stumbled upon these documents in a file folder. I never actually sent it to FSA.

Unfortunately, the practice closed over 9 months ago and the doctor moved to Europe. My concern now is that if FSA verifies claims but consistently gets no response from my ex-healthcare provider, they will make me responsible for payment of treatment.

In case it matters: I used all the funds on this one procedure, so I have no remaining balance.

Answer 1

It's not likely that an FSA vendor will accept your proof at this point. Do you know your plan's plan year (does the plan have a January 1 start date)? I'm assuming you're referencing the 2015 plan year considering you mention it's been nearly a year.

While this is not specific to Wageworks, there are a couple of options an employer can elect known as the grace period or the roll over. A grace period extends your ability to incur and file claims, but the extended filing date is typically March 31, considering a January 1 plan year. When the plan year has closed it's generally closed with a capital C in order to stay compliant with the IRS regulations.

The use it or lose it nature of an FSA stems from the fact that you have access to all of your annual allocation on the first day of the plan year. If you elect to contribute $200 per month, you can go have a $2,400 surgery on January first and pay for it completely with your FSA funds that you haven't even contributed yet. Then if in March you leave the company having only contributed $500 you don't owe the difference. BUT, if you don't use your funds they're gone.

As an aside, "medically necessary" doesn't really have any bearing on HSA and FSA expense eligibility. FSA and HSA accounts offer really great tax benefits to the people that use them, but that benefit comes with some strict regulation. While you can use your FSA funds for some things that your medical insurance generally excludes (like eye glasses and COBRA premiums) you may want to ensure that the procedure you've received is an eligible expense.

Here is IRS Publication 502 that outlines eligible expenses. And this is the eligible expenses list from Wageworks

Bottom line, I doubt you'll be able to collect on this claim. Unless your employer's plan year runs June to June and you're still in the plans grace period too much time has likely elapsed for the Vendor to accept claim paperwork (unless you have a strong advocate in HR who will make an extremely unusual and probably non-compliant exception for you).