Flex Spending Account - DATE OF SERVICE or by DATE OF PAYMENT.?

Question

I recently signed up for an FSA Flex account with my employers new outsourcing company. The FSA account started Nov 1 2009 and ends Oct 31 2010, so my wife had surgery in Sept 2009, so I submited our insurance deductable amounts that has been payed in November 2009, to claim them.

The outsourcing company said that

Per our FSA plan, the expenses have to be incurred in the benefit plan year. The dates when the expenses are paid, are not considered, and only the date of service.

I read on the IRS website
As per IRS publication 502 - "You can include only the medical and dental expenses you paid this year, regardless of when the services were provided."

Can the outsourcing company choose what they are going to cover by DATE OF SERVICE or by DATE OF PAYMENT.

HELP!

Answer 1

FSAs use service date and plan year. In this case, your start date is 11/1/2009. You cannot use the money retroactively. No tax benefit is supposed to work retroactively.

Since you will have to pay the money in 2009, you can itemize it on schedule A if the amounts are high enough to make a difference. The schedule A goes by date of payment.

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Answer 2

Sorry, it's always date of service.

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