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I'm asking a follow-up to my other question...

I'm currently enrolled in an FSA for my employer sponsored health plan. I'm considering leaving that health plan in favor of an individual (non-HSA) health plan that is about 50% cheaper for similar benefits.

My HR department says that I cannot use FSA to pay for any premiums regardless if I've paid them pretax or post-tax. I know that FSA cannot be used for premiums paid with pretax money, but I thought a post-tax premium would qualify.

Is there some definitive source that will tell me one way or the other? Does an FSA have the option to determine what qualifies as an expense or do they all have to follow some Federal or State guidelines?

Does an FSA provided by my employer differ in any way? (I'm not sure if there is such a concept as a non-employer sponsored FSA).

I'm speculating if my company (about 100 employees but only about 1/2 can afford the health insurance) is trying to keep me on their sponsored plan just to gain the tax benefits. The premiums are jumping every year as the (relatively small) pool of employees are maxing out their medical expenses...

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Tim Reddy
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2 Answers2

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They are wrong. If they offer an FSA, they must abide by the rules regarding FSA eligible expenses, plain and simple. They can offer a lower limit than the general maximum ($5K/yr?) and they can allow a grace period on expenses, or not. But, they must allow reimbursements for reimbursable items. Medical Insurance premiums are included. See this comprehensive list.

On the IRS web site, Pub 969 discusses FSAs at a higher level and indicates that Publication 502 has the detailed list of reimbursable expenses. Medical insurance is listed. I offer this chain so one can find the data directly from the IRS and not claim that Wikipedia might not be accurate.

At this point you need to decide how far you want to go with your benefits department on this. Do they offer a copy of what they claim is the accepted list of reimbursables?

JoeTaxpayer
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You can never use a health FSA for individual health insurance premiums. Moreover, FSA plan sponsors can limit what they are will to reimburse. While you can't use a health FSA for premiums, you could previously use a 125 cafeteria plan to pay premiums, but it had to be a separate election from the health FSA. However, under N. 2013-54, even using a cafeteria plan to pay for indivdiual premiums is effectively prohibited.

porter dayton
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