Medical FSA and dependents
June 19, 2016 10:17 AM   Subscribe

What happens if I pay for my daughter's medical care with my FSA card, and it turns out when I file my taxes that she wasn't a dependent (e.g. didn't enroll for classes as expected so wasn't a full-time student for five months, or was claimed as a dependent by her mother)?

I enrolled in an FSA for the first time this year, but didn't realize that there's a dependency requirement. I pay for my kids health insurance and most of their health costs too, but they may not qualify as dependents for tax purposes (ages 17 and 19). Does that mean that I can't use the FSA to pay for their care?

I have a card, so in general I won't be filing reimbursement forms.

My googling is returning results related to "dependent care", but that's not what this question is about.
posted by idb to Work & Money (5 answers total) 1 user marked this as a favorite
Dependents for medical care are not necessarily the same as tax dependents. You can generally keep even independent children on your health insurance till age 26, so check with your particular plan (or HR, who should know, if you're insured through work). As long as they're listed as dependents on your insurance you should be fine with using your FSA.
posted by The Elusive Architeuthis at 10:32 AM on June 19, 2016

My FSA specifically says that they have to be claimed as dependents on my taxes to count for the FSA and that I'll have to pay the taxes on those expenditures.
posted by k8t at 10:36 AM on June 19, 2016 [1 favorite]

IRS Guidelines here

Apparently, dependent means dependent on you tax return, not on your insurance.
posted by SemiSalt at 10:38 AM on June 19, 2016

Thank you...actually, that document that SemiSalt linked seems to indicate that children under 27 are covered.
posted by idb at 11:19 AM on June 19, 2016

It will depend on your specific plan. The Health Care Reform Act allows plans to give parents the ability to spend FSA dollars on children up to 26, even if they're not dependents, but does not require it. Your HR department should hopefully be able to clear up exactly who their plan covers.

If you're asking whether you can get away with it if they're not covered, I've had lackadaisical FSA administrators and ones that gave the third degree over expenses. If you put invalid expenses on the FSA and get audited, you could have to pay the costs out of pocket (losing the FSA money) and have penalties.

If they are not covered, the safest thing to do is to get anything you've already spend FSA money on them disqualified and pay for it now, and then use the restored FSA funds on yourself this year. There's various things like first aid kits and sunscreen that you are allowed to buy using the funds if your personal costs won't use up all of the funds you allocated.
posted by Candleman at 11:29 AM on June 19, 2016 [2 favorites]

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