FSA Reimbursement and Gap Insurance Plans

[stepitup]

I'm currently enrolled in a FSA through my employer and have set aside money for reimbursement. I think I was a little aggressive in the amount I deducted and am looking for best use for the money.

My employer also gave me a gap insurance alongside my medical plan that pays money each time you visit the doctor or receive other medical services.

I'm wondering how the gap insurance payments are treating from a tax/fsa perspective. Do I need to offset the cost of a doctor's visit by the amount I receive from the gap insurance for that same visit? Or, since the gap insurance doesn't require me to have paid a certain amount and just requires me to visit the doctor to obtain a benefit, does it not factor into the FSA?

I've tried to research the question myself but so far haven't had any luck. Any advice or direction would be appreciated.

[walkwalkwalk]

So you're trying to use an FSA to pay for an already paid for (by the Gap insurance) procedure/doctor's visit? Not gonna fly. If that's not what you're trying to do then explain what you're trying to do.

[reeshau]

I think you are looking too hard for a loophole--if it sounds too good to be true, it probably is.

When I submit items for reimbursement, one of the statements I attest to on the form with my signature is that I have not been reimbursed for the submitted expense.  There are no asterisks about the type of insurance that does the reimbursing.

For legitimate strategies to use up your dollars:  first, are you allowed a carryover until next year?  Next, take the same thinking about treatment:  can you pull ahead dental / vision checks?  Do you have any regular prescriptions that you could get more of?  This was easier when non-prescription drugs were eligible.  But if you have glasses or disposable contacts, you can soak up a lot of excess.

[EricEng]

They are correct.
https://www.irs.gov/pub/irs-pdf/p502.pdf

You can't include medical expenses that were paid by
insurance companies or other sources. This is true
whether the payments were made directly to you, to the
patient, or to the provider of the medical services.

That said, the oversight on this HSA stuff from IRS is non existent and mostly honor system.  The only verification occurs if/when they audit you.

You also have the option to sit on any expenses you paid (that weren't reimbursed by insurance) for years and withdraw whenever you want.
https://www.irs.gov/irb/2004-33_IRB/ar08.html

Q-39.  When must a distribution from an HSA be taken to pay or reimburse, on a tax-free basis, qualified medical expenses incurred in the current year?

A-39.  An account beneficiary may defer to later taxable years distributions from HSAs to pay or reimburse qualified medical expenses incurred in the current year as long as the expenses were incurred after the HSA was established. Similarly, a distribution from an HSA in the current year can be used to pay or reimburse expenses incurred in any prior year as long as the expenses were incurred after the HSA was established. Thus, there is no time limit on when the distribution must occur. However, to be excludable from the account beneficiary’s gross income, he or she must keep records sufficient to later show that the distributions were exclusively to pay or reimburse qualified medical expenses, that the qualified medical expenses have not been previously paid or reimbursed from another source and that the medical expenses have not been taken as an itemized deduction in any prior taxable year.

There was talk of removing this loophole in the last tax plan.  I haven't heard if it made it in.

[stepitup]

Thanks for the replies. My default was going to be to not claim it, but I was hoping maybe there would be a way.

I think the distinction that made me ask is that the gap insurance isn't offered from my health insurance provider but rather is from a separate company. It's not exactly that I am being reimbursed for going to the doctor but rather that if I go to the doctor this other company sends me a check for a set amount.

I thought the distinction might provide for the possibility.

Ultimate it's not a huge problem, while it is an FSA and I do have to use it before the end of the calendar year, I do wear eyeglasses so getting some extra ones wouldn't be the worst problem.

[reeshau]

@EricEng , the OP was asking about an FSA, not HSA, so carrying over prior year's expenses doesn`t work.  With an FSA, expenses must be within the calendar year, and must be claimed by the deadline.

[EricEng]

@EricEng , the OP was asking about an FSA, not HSA, so carrying over prior year's expenses doesn`t work.  With an FSA, expenses must be within the calendar year, and must be claimed by the deadline.

I'm aware of the differences and that he was referring to FSA.  My response though was still accurate for the expense part and IRS, I just rambled a bit on HSA stuff as well since the subject is closely related in case OP also had an HSA.