How are prenatal expenses handled under the Health FSA?
Current IRS regulations concerning Medical Flexible Spending Accounts (Health FSAs) create a confusing situation for participants regarding reimbursement for prenatal care and child delivery expenses.
IRS rules are very strict that eligible expenses may only be reimbursed by an FSA plan after the expense has been incurred. As an example: if a participant in a calendar year FSA plan pays $2,000 in delivery charges on June 1st, but the child is not delivered until July 20th, the delivery charges are not eligible for reimbursement until after July 20th.
In addition, there is a plan year limitation. IRS rules only allow reimbursement for services incurred during the active plan year. In the example above, any prenatal care expenses incurred prior to January 1st of this year would not be eligible for reimbursement in this plan year. Only services incurred January 1 – December 31 are eligible.