I began a new job on April 8, 2002.  At that time I signed up for a
pretax medical savings account.  Money is taken from each paycheck and
placed in that account.  I can make claims against the account for any
medical expenses that are not reimbursed from my medical insurance.  I
have incured medical expenses during 2002 that were not reimbursed
under my prior employer's insurance program.  That employer did not
offer a pretax medical savings account.  Can I make claims against the
new medical savings account for unreimbursed medical expenses that I
incurred prior to starting the new job?  If I can make a claim, how
can I prove this to my "agent" that refuses to allow me to file?

---

Request for Question Clarification by pinky-ga on 26 Jun 2002 12:04 PDT

Hi Sinvacas,

Could you check to see if you signed up for an actual "Medical Savings
Account" or a "Medical Reimbursement Flexible Spending Arrangement
(FSA)."  As similar as they sound, they are quite different. It is
probably the latter, as it is much more common. If you are obligated
to use all of the pretax dollars you contributed by the end of the
year or it is forfeited, then it is a Medical Reimbursement FSA.

Thanks,

Pinky-ga

---

Clarification of Question by sinvacas-ga on 27 Jun 2002 16:19 PDT

I have checked, and the account  is an FSA.

Greetings!

I also have a flex plan where I work, but unfortunately, we could not
submit any expenses prior to the date the plan took effect.  There is
a waiting period before you can submit claims.

I reconfirmed this information with my Human Resource department, and
the director assured me that the rules concerning Flex Plans are the
same for every company.  Company's offering this type of plan must
follow the guidelines set forth by the government.

It has been a pleasure to research your question.



Links of interest:

Flex-Plan Services Incorporated
http://www.flex-plan.com/flex.asp
Common Ineligible Flexible Spending Account Expenses
Please scroll down to the last item on the list:
http://www.flex-plan.com/flex.asp

Search strategy:

Contacted a director of Human Resources for confirmation

Google term

flex plan

---

Request for Answer Clarification by sinvacas-ga on 29 Jun 2002 04:48 PDT

Thanks for your help, but I would like to clarify a couple of points. 
I can understand why medical expenses incurred prior to the start date
might be ineligible, if they were from a prior tax year for example. 
But did your HR representative clearly understand that, in this
instance, the change took effect during a tax year, and that the issue
is eligibility of expenses incurred before the plan that were incurred
during the tax year in question, not expenses incurred subsequent to
leaving the plan, which is the only related issue that I found to be
explained in the reference you provided.

thanks,

Sinvacas

---

Clarification of Answer by madsky101-ga on 29 Jun 2002 06:19 PDT

Hello again,

First of all, let me apologize for the problem concerning the links
that I have listed.  I did not realize that they were not taking you
to the information that I wanted you to see.

The main one was listed under the FAQ Sheet:

"What would my flexible benefit plan year be? "
 
"The effective date of your Flexible Benefit Plan would be the first
of the month in which you adopt the plan. The plan year-end may be
calendar, fiscal or your insurance plan year-end each year."

Second, when I talked to my Human Resource director, I did make the
point that these expenses were for medical bills that you incurred in
2002, but prior to starting your new job with your current employer.

I will be happy to reconfirm this information with my Human Resource
department after the weekend.  I will inform you of any further
information.

Thanks

madsky101

---

Clarification of Answer by madsky101-ga on 01 Jul 2002 09:29 PDT

Hello again!

I received this email today from Stanley Aitken, with Flex-Plan.com

He writes:
"IRC Sec 125 allows a participant to be reimbursed for expenses
incurred
while an active participant. Expenses incurred either before or after
the
plan year are not eligible."

I am happy to find the conclusive evidence that answers your question.
 If you need to reach Mr. Aitken for further information, you will
find the link to the Flex-Plan company listed.

Thanks again, and it has been a pleasure to provide assistance.



Links of interest:

Flex-Plan
http://www.flex-plan.com/flex.asp

I'm not sure the question was really answered.

Hi Sinvacas,

Just to verify that madsky101-ga's answer is correct, I thought I
would point out a couple of sites that should help you with any
lingering doubts you may have.

Having gone through this same battle myself a couple of years ago with
my husband?s benefits department, I certainly understand the logic you
are following in thinking that expenses that were incurred during the
calendar year that you began the FSA (even though they were prior to
the initiation of the plan) seem like they should be eligible,
especially since this is basically a tax issue and taxes are based on
a calendar year, etc.

Well, much to my disappointment, I learned from the Human
Resources/Benefits Manager (in no uncertain terms I might add) that
the requirement for eligibility for reimbursable expenses boils down
to:   "?if you are not contributing to a Medical Reimbursement FSA
during the time the expense was incurred, then it is not eligible for
reimbursement.  Period!?

Even with that pronouncement from the Human Resource Department gurus,
I still had to find the wording of the law that made this true.  Well,
much to my chagrin, I did find the legal wording; and, yes, the gurus
were once again correct.

The following excerpt from a federal/state law clarification site
pinpoints the specific wording that explains why the expenses incurred
prior to your initiating the plan not eligible for reimbursement.

?FEDERAL/STATE LAW

?Flexible Spending Accounts (FSA) are also offered under cafeteria
plans and generally consist of either a Medical Reimbursement account
or a Dependent Care Reimbursement account.  A reimbursement account
allows an employee to set aside funds on a pre-tax basis for later
reimbursement of medical or dependent care expenses on a tax-free
basis.  However, premiums for health insurance may not be reimbursed
under a Medical Reimbursement FSA.  Expenses reimbursed through an FSA
must be incurred during the participant's period of coverage under the
FSA, which may not exceed 12 months.  Any participant in a cafeteria
plan must forfeit any unused money to the plan at the end of the
coverage period.?

Also, at the same site:

??As stated under "Federal/State Law" an FSA is a reimbursement
account that allows an employee to set aside funds on a pre-tax basis
for later reimbursement of expenses incurred during the participant's
period of coverage under the FSA.?

http://www.ftb.ca.gov/other/legis/01_02absb/ab2617_040802.pdf
Note: You need acrobat reader to open this site

If you are interested in reading more specifics about the Flexible
Spending Accounts, the following link leads to an article from
Taxplanet.com that is outstanding:

http://www.taxplanet.com/taxguide/job/flexiblespendingaccts/flexiblespendingaccts.html
 
I hope this helps.

Pinky-ga