• FreeAdvice has a new Terms of Service and Privacy Policy, effective May 25, 2018.
    By continuing to use this site, you are consenting to our Terms of Service and use of cookies.

Insurance company raided FSA??

Accident - Bankruptcy - Criminal Law / DUI - Business - Consumer - Employment - Family - Immigration - Real Estate - Tax - Traffic - Wills   Please click a topic or scroll down for more.

LadyFaire

Junior Member
What is the name of your state (only U.S. law)? Virginia

Is it legal for an insurance company to take funds out of a flex spending account to pay a claim? Our insurance company 'negotiates' claims to bring the amount lower. Have never seen them actually PAY anything. Now, they 'negotiated' a claim, and took what was left out of our FSA without any input from us. Now we no longer have enough to cover copays and prescriptions. It is only January, and they cleaned out (almost) everything in our FSA.
 


LdiJ

Senior Member
What is the name of your state (only U.S. law)? Virginia

Is it legal for an insurance company to take funds out of a flex spending account to pay a claim? Our insurance company 'negotiates' claims to bring the amount lower. Have never seen them actually PAY anything. Now, they 'negotiated' a claim, and took what was left out of our FSA without any input from us. Now we no longer have enough to cover copays and prescriptions. It is only January, and they cleaned out (almost) everything in our FSA.
Are you sure it went down that way? An insurance company should have no access to your FSA.
 

cbg

I'm a Northern Girl
Color me skeptical because LdiJ is correct; it would be unusual to the point of being unheard of for the insurance company to have access to the FSA.
 

LdiJ

Senior Member
Color me skeptical because LdiJ is correct; it would be unusual to the point of being unheard of for the insurance company to have access to the FSA.
Is it possible, legally or illegally, for anyone to raid an FSA? Is there any legal method where a party could raid an FSA before the "use it or lose it" provision kicked in? Is there any illegal method where someone could?...other than the obvious criminal hack?
 

cbg

I'm a Northern Girl
Not that I can think of off the top. I'll give it some thought overnight.
 

justalayman

Senior Member
Not that I can think of off the top. I'll give it some thought overnight.
Don’t you have to use the money on an fsa every year (no carry over)? If so, doesn’t it get reclaimed by the employer?



LasyFaire, are you certain your employer didn’t raid your fsa to reclaims it? Given its the first of the year it could be more than a coincidence your fund was emptied.
 

cbg

I'm a Northern Girl
That's more or less what I was thinking. FSA's are use it or lose it in both directions. While an employer MAY allow a grace period of up to two and a half months, they are not REQUIRED to. Likewise, while they MAY allow a roll over of up to $500, they are not REQUIRED to. (They may do only one of the above two options but they are not obligated to do either.) If an employer does not offer either option, then in January (or in March, if the first option is offered) any funds still in the account revert to the employer.

There are two ways to claim funds on an FSA. One is through the use of a debit card that is provided by the FSA administrator and which has the funds loaded onto it. The employee can pay for the service at the point of sale with the debit card. The other way is to pay up front for the service, getting a receipt which must have very specific information on it, and submitting the receipts with whatever claim form the administrator requires for reimbursement. I have been working with FSA's off and on, mostly on, for well over 20 years and I have yet to hear of a method other than those two. FSA's are heavily regulated by Federal law and I am EXTREMELY skeptical that any insurance carrier has direct access, legally or illegally, to the FSA funds.

I would very much like to hear from the OP what proof she has of the insurance carrier's involvement.
 

FlyingRon

Senior Member
The first pay period in January is a traditional "or lose" clean out. The money goes back to the employer, not the insurance company.
 

Find the Right Lawyer for Your Legal Issue!

Fast, Free, and Confidential
data-ad-format="auto">
Top