How are prenatal expenses handled under the Health FSA?
Current IRS regulations concerning Medical Flexible Spending Accounts (“Medical FSAs”) create a confusing situation for participants regarding reimbursement for prenatal care and child delivery expenses. This explanation attempts to summarize the relevant rules and considerations for participants who seek to be reimbursed from Medical FSAs for prenatal care. The Situation: The practice of many prenatal care providers to require payment in advance of services (including delivery) is putting participants in a bind. Participants who are required to pay these amounts are doing so before insurance can process the charges and before the charges are eligible for FSA reimbursement. This puts the Employer and the Plan in a bind, because while the Employer and the Plan seek to assist the participant and provide timely reimbursement, they must adhere to strict IRS rules and regulations that have serious tax consequences for not only the employer, but also the participant. The Rules: IRS rules are
