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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: missundecided on October 10, 2014, 10:18:16 PM

Title: What's covered under a limited FSA?
Post by: missundecided on October 10, 2014, 10:18:16 PM
I have both a limited FSA and an HSA to go with my HDHP at work. The limited FSA works like an FSA but is only eligible for dental, vision, and preventative care expenses, which includes diagnostic. However, I haven't been able to find any definitive IRS information about what "diagnostic" means. (Or maybe my Google skills just need work. Always a possibility.)

In my case, for example, I have a chronic medical condition that is right now still in its latent stage and thus is being untreated. However, I have to get regular labwork done to make sure it's still sleeping, so to speak. When I get my EOBs, these labs say "diagnostic."

Some things I found online say that as long as it's not for something that's being treated, then it's covered under that diagnostic/preventative care umbrella. Other sources say no. I'm not sure how to interpret this rule myself; on the one hand, I already HAVE an official diagnosis so there's nothing to prevent anymore, but on the other hand, I don't have the symptoms yet, I'm not getting treatment, and though it's chronic, it's inactive. We're just keeping an eye on the sleeping monster.

I'd much rather pay for these labs with my limited FSA than to touch my HSA, especially because I'm going to have to endure a lifetime of these so-called diagnostic labs and I'd like to stretch my tax-protected medical funds as much as possible.

Has anyone had any experience with limited FSAs, or know how the IRS considers what is preventative/diagnostic?
Title: Re: What's covered under a limited FSA?
Post by: RedefinedHappiness on October 12, 2014, 07:27:44 AM
I can't answer your question and would recommend you sinoky call the limited FSA account administrator. However, I did want to point out that (a) you can use a limited FSA for post deductible medical expenses and (b) you should cobtribute to a limited fsa obly if you max out your HSA AND hhavr known limited FSA qualified expenses.
Title: Re: What's covered under a limited FSA?
Post by: missundecided on October 12, 2014, 07:46:38 AM
I don't think my particular plan does the "post-deductible" eligible expenses. Besides, it's a moot point for me because my deductible is also my plan's max out-of-pocket.

I've considered calling the plan administrators, but I swear, sometimes I know more than they do when I call about what is or isn't covered. (And that isn't me as a know-it-all.) Besides, I used to work as a traditional FSA adjudicator, and our guidebook could be just as vague as the IRS's list of possibly-questionable qualified expenses. Limited-purpose FSAs, however, are completely new territory for me.

Despite that experience, I have no clue what goes on on the IRS side during an audit for medical expenses that are in the grey area.

Anyway, luckily yes I do max out my HSA and will use up all of my limited FSA this year for a planned dental expense. But once that major procedure is done, knowing if I can use my LFSA for my known diagnostics (routine for ME, maybe not routine for average Joe) will be helpful in the future.
Title: Re: What's covered under a limited FSA?
Post by: RedefinedHappiness on October 12, 2014, 12:51:44 PM
I understand your frustration. Best of luck with getting info you need (and mote importantly your health). If you do call (and get a competent cust SVC rep), ask whether the post fed expenses are eligible and if so whether the deductible is your deductible or the IRS minimum deductible. You might find some more tax savings. Best of luck!
Title: Re: What's covered under a limited FSA?
Post by: missundecided on October 24, 2014, 12:27:06 PM
Quick update for anyone curious: the administrator said yes, diagnostics for a pre-existing condition that is merely being monitored and not being treated is covered, but it's all for naught: my employer has decided to restrict the limited FSA to only dental and vision expenses next year, and with a different administrator. HR confirmed this.

The enrollment presentation from last year said it would only be for dental and vision too, but the claim forms negate this, which is why I was able to submit successfully some medical stuff this year. So maybe this is another example of "what we say isn't exactly the whole scenario."