I would like to pre-pay for my daycare needs for a full year. How does the flexible spending account work in that situation?
The IRS requires verification of a claim after it has been incurred and services rendered. In this case, the employee could submit the receipt from the provider for the full year’s expense after January 1, of the new plan year. But, a claim would need to be filed for each period (week or month), after the period started, verifying that services were received. The claims for each period would not need to include a copy of the original receipt. It may seem like additional work, but the IRS has stated that claims need to be verified after they are incurred. They assume that a contract could be cancelled and unearned payments refunded to the payor.
Related Questions
- I participate in the Health Care Expense Reimbursement flexible spending account. Does money in that account roll over from year to year?
- What if there is money left in my Flexible Spending Account(s) at the end of the Plan Year?
- Does the money in a Health Flexible Spending Account roll over year after year?
