FSA Spending and Orthodontic Treatment

Did you know the current IRS regulations allow qualified participants of a Flexible Spending Account (FSA) to be reimbursed for orthodontia prepayments? This is especially important for orthodontia services which typically occur over the span of multiple years.

Flexible Spending AccountHere’s how FSA spending works with orthodontia:

The standard rule for FSAs has been that you are only reimbursed after the service has been rendered. Now, the IRS allows you to be reimbursed for orthodontia services before the services are rendered, but only to the extent that the employee has made the payment in advance of the service in order to receive the service.

For example, let’s say your employer provides you with an FSA maximum amount of $2,000 for 2018. In February, you learn that your child requires braces, but they are estimated to be on for longer than one year, possibly two. Rather than you be required to pay that $2,000 in February of 2018 and not be reimbursed until Februrary of 2020, when technically the service is rendered, you are able to submit documentation for yourself to be reimbursed for the $2,000 sooner. The rule is that the service is deemed to be “incurred” on the day of payment, not necessarily after all services are rendered.

A few things to keep in mind:

  • You must be an active participant of the FSA plan—either through your employer or a COBRA plan and making contributions to it.
  • The IRS will only reimburse you if the services are in fact to be rendered. You can’t use this to pay for services that were already provided in the past or for services you don’t anticipate to occur until later in the future.
  • You may choose to be reimbursed based on services incurred or as a lump sum payment. Individuals who do not do lump-sum payments, but rather a payment plan, will appreciate this.

Don’t forget to submit the appropriate documentation

The IRS requires you to provide proof, which includes the name of the person who received the treatment, the beginning date, the contracted amount, and the amount you paid. Include any initial fees or records fees. In a staggered situation, be sure to submit documentation with each claim from the orthodontist that shows the amount you paid and the name of the patient.

Ready to roll?

Call Gutierrez Orthodontics today to learn how you can use your FSA while undergoing orthodontia and be reimbursed sooner for your treatments.

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