- My employer's Plan Year is the fiscal year, so for this issue it concerns Sep 1, 2016 through Aug 31, 2017.
- We were expecting a baby in mid-Aug 2016, so knowing charges would be coming in Sep and onward, I maxed out my Flex election while choosing coverage.
- Everything went as planned, I had more than enough invoices to use the full Flex account, then in Dec 2016 I was told to return funds since the Service Date was outside of the Plan Year.
This is not my field of expertise, but I took the time to look around and found that the IRS says Service Date is irrelevant:
- https://www.irs.gov/publications/p969/ar02.html, under Distributions From an FSA
Qualified medical expenses. Qualified medical expenses are those specified in the plan that would generally qualify for the medical and dental expenses deduction. These are explained in Pub. 502.
- From Pub. 502 (https://www.irs.gov/pub/irs-pdf/p502.pdf):
Page 2: What Expenses Can You Include This Year? You can include only the medical and dental expenses you paid this year, regardless of when the services were provided.
I opened an appeal case with HR and waited for more than a month for them to respond. They responded by saying they're right and I'm wrong, but the IRS publications they used to demonstrate this only referenced descriptions of how deductions from Salary into FSA are done and how those must be done within the Plan Year. So it wasn't relevant, and I'm going in circles with them now.
If I'm not correct here, what am I missing?
If I am correct but HR refuses to budge, what recourse do I have?
After a few more email exchanges, I got a call from the HR supervisor. He stuck to their policy, and I told him that I'm basically tired of arguing this and giving up. But I did challenge him to find the source of their interpretation of the rules, so I'm sure I won't be hearing back from him.