Flex-Ed: How to fix mistakes with FSA funding and reimbursements
Mistakes are common. But when you make a mistake with your FSA reimbursements or funding, you need to be able to fix them ASAP, so you're not caught paying for them later. As in, you want to be sure that you're using your FSA correctly so that you're not required to pay your reimbursements back or stuck with money you can't use.
Sure, you can have the best-laid plans, but stuff happens. Instead, take a look at the following scenarios in case you made one of those mistakes, and what you can do about it.
Your receipts weren't clear
Just because you know what you spent your money on, doesn't mean your FSA administrator is clear on it. Yes, you have receipts backing up your purchase but that doesn't mean it automatically counts as solid proof.
Let's say you purchased got a prescription for a bunch of antibiotics at the pharmacy. You decided to submit the credit card receipt to your FSA provider. Unfortunately, that's not enough proof because the IRS requires you have an itemized receipt.
If your FSA administrator comes back to you and says your original receipt isn't acceptable proof, you should be able to resubmit. Now's the time to find that itemized receipt — whether it's your prescription with the price on it, or go back to the pharmacy if you need to and see if they'll print another one for you.
Otherwise, you can submit what's called an Explanation of Benefits (EOBs) that you'll receive in the mail from your health insurance provider -- basically, a fancy way of explaining a part of your transaction. What it needs to include is your name, date of purchase, the provider/retailer's name, price of the item, and the name of the item or service. Don't worry though - this is standard information to be included on all EOBs.
Even if you made the initial mistake, you can still fix it as long as you provide ample proof as quickly as possible.
You overallocated your FSA
Maybe you overestimated how much you'll need and you contributed a bunch of extra money to your FSA. Now you realize, you may not have enough qualified medical expenses to spend it all. The good news is that it's still your money. The bad news is that you're at risk of losing it of you don't take action.
Before assuming you don't have enough qualified medical expenses, make a list of things you may need. Perhaps it's time to replace your broken pair of glasses, or you're eyeing that foot circulator but were scared to make the purchase. Be strategic about what you want to purchase and make sure it's something you need, and you're not spending money just to spend it.
Something else to consider is looking into your FSA plan to see if there's a rollover option — typically up to $500 per year — or you may be able to take advantage of a Grace Period, if you have one, giving you extra time to spend down your funds. This way, you can still keep your cash longer without feeling like you have to buy things you don't need (which you shouldn't do, anyway).
Keep in mind that you won't have both the rollover and Grace Period option, and plans are not required to offer either so map out your purchases depending on what your plan offers.
You submitted an incorrect claim form or have no matching receipts
Don't freak out. If you submitted the wrong form, contact your FSA provider right away and see if you can resubmit. It's as simple as that. However, if you make a purchase and don't have a matching receipt, you may be able to substitute one from another qualified transaction.
Let's say you purchased prenatal vitamins and sunscreen and realized you don't have the receipt. Instead, you may be able to find another receipt for a qualified purchase to offset your original purchase. Maybe you buy additional sunscreen or more prenatal vitamins at a different store and submit that receipt, instead. Note that not all administrators will allow this, so you'll want to contact them to find out about your options.
In some cases you may not even need to submit a receipt, although we always advise that you keep them just in case. For example if you used your FSA debit card to make a payment and at a qualified merchant with the proper system in place, your expense may even be automatically approved without the need for documentation.
Mistakes happen to the best of us. The important thing is to recognize them when they happen, correct course and try not to let it happen again.
Buy with your FSA card!
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