Tuesday, October 13, 2009

Am I Supposed to Return the Money?

The biggest problem with a Flexible Spending Account (FSA) is that you have to use up your pre-tax contributions by the end of the year (or some other date determined by your employer), or you lose it. I generally squirrel my FSA contributions through June and then try to exhaust it over the remainder of the year.

This year, due to chronic neck pain and headaches, I started visiting a chiropractor who is outside of my health insurance network. Because he is outside of the network, my insurance only pays 70% of the chiropractor's fees and I am responsible for the remaining 30%. Fortunately, I've convinced my chiropractor to waive my 30% portion of his fees.

My insurance company (and FSA administrator) is unaware of this side deal I made with my chiropractor and has paid me all of my FSA contributions for the year to apply towards the 30% chiropractor fee.

Am I supposed to return this money to my FSA administrator? Or in the alternative, am I supposed to tell my FSA administrator that my chiropractor has waived my portion of his fees?

Part of me says, "Yes," since the FSA money was being paid to me to apply specifically to the chiropractic fees. On the other hand, the money is mine and I've actually been using it to pay other health care costs like cold/flu medication, inhaler, lozenges, cold sore ointment, etc. It's not like I'm using my FSA money to buy jewelry and clothes. If I'm called on it, I can always produce receipts to prove this. I do feel guilty that I'm earning interest on the money, though. (Ooooh. A whopping 1.7% on $255!!)

What would you do?


asgreen said...

That is a good question. Even though the right thing to do would be to probably inform the FSA company. I wouldn't.

chacha said...

This is the exact reason why I if I have an FSA I choose the "unlinked" option (meaning I have to file annoying claims for the money). I had a situation where I already paid my portion of dental work because they insisted I pay before I had the work done (they were crooks). Then my FSA automatically paid them my portion in addition to everything else and through screwy invoicing and such the dentist refused to admit they actually owed me money. I am still pissed about it 5 years later. So never again will I choose the automatic debit/payment thing with FSA.

Miss M said...

I'm confused, was this paid up front and now the doc has decided to charge less than was estimated? Usually FSA funds are a reimbursement, you had to spend the money before they will reimburse you from the account. Technically, I would think you are supposed to return the money. You set the money aside pre-tax to use for medical expenses, you have now withdrawn the money (not paying tax on it) and not using it for medical expenses. But I doubt anyone will notice so it will be up to you what you do about it.

D in Kansas said...

I'd say keep it since you used the $ for medical expenses that you could have been reimbursed for anyway.

paranoidasteroid said...

Of course you know what the medical industry would say is the right thing to do!

I mean, technically you took care of your part of the bill... only you payed with charm and negotiation skills!