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rebeccasf [userpic]
Can FSA funds be used for HRT?
by rebeccasf (rebeccasf)
at January 19th, 2010 (03:26 pm)

Mood: worried

Wondering if anyone has any input on this!!

I've been using my FSA (Flexible Spending Account) for HRT for 2 1/2 years now. (For those that don't know, an FSA is an account that you can put money into, pre-tax, and use for qualified medical expenses.) In all that time, I've had no issues. Yesterday I received an email from the FSA administrators stating that they have denied my latest claim. When submitting claims for payment from the FSA administrators, the claim form specifically requests the following information.

Your claim documentation must be provided by a third-party and include the following:
(1) the service date (including the year);
(2) the name of the service provider;
(3) the patient's name (waived for over-the-counter drugs/medicines);
(4) a description of the service provided; and,
(5) your total financial obligation for the service provided.

I have always provided the above information in the form of a detailed receipt directly from the doctor’s office. Today I received an email that states I must provide the additional information below for my claim to be processed.

Under the Federal Regulations governing your Plan, you must establish medical necessity for this expense in order for it to be considered for reimbursement. In order to establish that the service is "medically necessary", please resubmit this expense with complete documentation, which includes statement from the treating physician that:

(1) Identifies the medical condition being treated.
(2) Recommends the specific course of treatment.
(3) States the duration of the treatment.

I've never been asked to provide this level of detail before (in over 2 years) and I haven't even seen anything in the scant FSA documentation provided by my company that said this may ever be requested. The receipt I get from my doctor is very detailed and has all of his professional information including his license number. I feel it's abundantly clear that I'm not seeing a cosmetic surgeon and that the treatment I'm receiving (HRT/estrogen) is common and not cosmetically related.

I have contacted my doctor and he's willing to provide the above information, however, he says he cannot provide it without specifically revealing that it is for GID. So basically I have to out myself as trans to my FSA adminstrators to fulfill the request.

My first (and most pressing) fear is that the claim may be denied as not being "medically necessary". From what I've gathered online, FSA funds may be used for any medical expense that is considered tax deductable under IRS publication 502. This specific publication does not address HRT (although I'm sure it would be covered if I was a cis female). I've also came across the following PDF on the IRS website. It details the case of someone who attempted to claim transition related expenses on their tax return and was wholly denied.


The amount of money for this claim is not insignificant (about $1000). Since my plan issues a debit card for FSA expenses, they have already paid the requested amount. If my appeal is denied, I would be forced to pay this money back out of my own pocket. This would create a hardship for me. Not to mention the fact that since FSA accounts are "use it or lose it" and the year has passed (the appointment was in November 2009), that money would be lost and could never again be used. It's like throwing money away!

I also feel that this is an invasion of privacy and that by re-submitting the claim that specifically states my trans status, that this information may somehow make it back to my employer. I have not transitioned at work for fear of any repercussions that may happen (I still present as male because I don't "pass" and I think we all know how visibly trans people are treated), although I have been on HRT for over 3 1/2 years. As far as I can tell, FSA administrators fall in a gray area of the HIPAA (which dictates medical privacy laws). So they may be able to legally out me to my employer in order to recover the money if I don't pay in a timely manner.

This additional request for information comes out of the blue and it feels like an attack. For me, my FSA is critical to my health care since my regular insurance (provided by CIGNA) specifically excludes any transgender care. It's very unnerving to be getting this after all this time of submitting claims with no problem.

Does anyone have any further information on HRT being a qualified expense under IRS rules or more specifically under FSA rules?


(x-posted to my blog)


Posted by: A story with no plot (homo_impetus)
Posted at: January 19th, 2010 11:35 pm (UTC)

I don't have the links handy, but I think in other discussions I have seen about this that no transition related expenses are not able to be used for FSA.
These were a few years ago, and so my memory is a little foggy. Hopefully, someone else who knows without a doubt will answer instead of me and my not so great recollection...

I am sorry this is happening to you.

Posted by: W. Iserman (regalpewter)
Posted at: January 20th, 2010 12:06 am (UTC)

Actually you have a double negative there in the first line.
Do you mean to say that they are not able to be used, or that no expense may be denied?
Just trying to clarify.

I am wondering if by these expenses not being covered my either insurance or FSA, the IRS can now declaire them to be cosmetic and applicable to the new tax on cosmetic procedures that is in the senate plan?

Posted by: A story with no plot (homo_impetus)
Posted at: January 20th, 2010 12:15 am (UTC)

Oh jeez...I am so bad with the typos. Thanks for pointing out that double negative.

No transition related expenses can be used with FSA.

Your second question seems like a valid concern to me. That is some scary shit if it is true.

Posted by: hrolleif (hrolleif)
Posted at: January 20th, 2010 12:25 pm (UTC)

The FSA should be able to be used for any doctor visits and all HRT. The only thing that is in question right now is reassignment surgery. AFAIK, we are still waiting on the court decision on that, and the only reason that was being denied in the first place is because the tax law has a provision that specifically denies cosmetic surgery (and the IRS is viewing GRS as cosmetic). AFAIK, there is nothing in the law that would deny office visits to endocrinologists (or any doctor) and the cost of hormones and related supplies. I bought all of my testosterone and needles, including the shipping costs, with my FSA last year. Nobody questioned that at all, and I'm listed as female on my insurance.

Posted by: A story with no plot (homo_impetus)
Posted at: January 20th, 2010 05:28 pm (UTC)

that is awesome. and something for me to keep in mind if I need to change insurance. Thanks

Posted by: OMGWTFLINEARBBQ! (quaere)
Posted at: January 20th, 2010 09:06 pm (UTC)
evolution sucks

The only thing that is in question right now is reassignment surgery.

That's interesting... I had top surgery last summer and funded almost the whole thing from an FSA, with no problems. I didn't realize that was something that's under dispute.

Posted by: hrolleif (hrolleif)
Posted at: January 20th, 2010 10:45 pm (UTC)

There are certainly ways around it, yeah, especially if no one asks any questions and there is nothing on the documentation that you send in that stands out as it being GRS. There are also some trans men I've heard of who have itemized the cost of their top surgery, got audited and it was fine based on their therapist letters and everything. The IRS is one giant contradiction.

Posted by: Dapper Dan (masscooper)
Posted at: January 20th, 2010 01:49 am (UTC)

The Senate plan pulled the cosmetic tax and substituted a tanning bed tax just before the approval vote: http://www.usatoday.com/news/nation/2009-12-21-health-care-plastic-surgery-tax_N.htm I am willing to believe it got snuck back in, I've been a little busy recently and haven't kept close track, but this is the most recent article I could find on it (in 10 minutes of googling).

Posted by: Allie (jackcantdie)
Posted at: January 20th, 2010 12:59 am (UTC)

I was wondering the same thing yesterday and actually emailed someone in Human Resources with hopes that they could either a) answer my question or b) point me to the right person to ask.

Let me know how it turns out.

I'm still waiting for a reply...

Posted by: sophie_jean (sophie_jean)
Posted at: January 20th, 2010 02:43 am (UTC)

First of all, for this level of detail to be revealed to your employer seems to be a breach of HIPPA. If you a have any network connections to a lawyer, you might have that checked out.

Second, there are plenty of doctors that do not reveal GID as the diagnosis for medications or treatments. They have traditionally generalized the prescription as a hormone imbalance, which it is.

Third, there are ways to get the prescriptions cheaper. Estradiol is 4 dollars for 30 days at Walmart with no insurance. Finasteride runs about 12 dollars, but Prometrium is usually cheapest off the web.

Hope this helps,

Posted by: rebeccasf (rebeccasf)
Posted at: January 20th, 2010 06:11 am (UTC)

1) Ya, I'm probably overreacting to being outed. But it was on my mind so I thought I'd throw it out there too.

2) I spoke with my doctor and he said he would have to put down GID as the diagnosis in order to meet the requirements of the additional information. So I don't think there's anyway around that at this point.

3) This bill was for an office visit with my endo and included several items beyond a mere prescription. That's the reason for the large dollar amount. I'm sure if it was just prescriptions, it wouldn't have been an issue.


Posted by: barrel of rain (barrelofrain)
Posted at: January 20th, 2010 03:30 am (UTC)

I'd suggest contacting the Transgender Legal Defense Fund. Someone should be able to consult with you over the phone, tell you what your rights are about both issues, and give you further help if it's necessary. I suspect that the FSA wouldn't be able to provide the reason to your employer (OMG THEY WERE USING IT FOR HORMONES!!!) and more likely, even if they were to do something ridiculous like garnish your wages or adjust this year's FSA, they would simply say that some of your expenses didn't qualify so they had to make an adjustment.

But, I'm not a lawyer, and the people at TLDEF are super nice, so I hope you give them a ring. My partner had a question about a question about the legality of something/if something was discrimination, and the ED called him back that day and talked him through it, and didn't even ask him for information that would out him (this isn't a problem for him, but I know it might be a concern for you). Good luck!

Posted by: rebeccasf (rebeccasf)
Posted at: January 20th, 2010 05:59 am (UTC)

Thanks for the TLDF link. I actually asked this question to the Transgender Law Center (here in the bay area) through their online form but haven't heard back from them.

The reason for worrying about my employer is that, technically, this money is probably theirs. A friend of mine who's a HR manager said that her company gets all the money that's not spent in the companies FSA accounts. The administrator only gets an administrative fee. So my worry was that if I didn't re-pay the money in a timely manner, the administrator could just give the file (meaning all the information related to this expense) to my company's legal dept. so they can recover the funds. That's probably unrealistic, but it was on my mind.

Posted by: barrel of rain (barrelofrain)
Posted at: January 20th, 2010 05:46 pm (UTC)

No problem. TLDEF is on the other coast, but they "combat discrimination against transgender people wherever it arises" according to their website, so if you haven't heard back from the TLC by you, I'd give TLDEF a call.

Posted by: hrolleif (hrolleif)
Posted at: January 20th, 2010 12:00 pm (UTC)

What you are describing is covered, yes you can use FSA funds to pay for it.

Did the doctor submit to your insurance first? The best thing you can do is send them a copy of the insurance statement, which should tell how much you owe, rather than the doctor's receipt. However, if the doctor's receipt has all the necessary information on it, I would call the FSA administration and ask them why it is not acceptable.

Also, I found out the hard way that FSAs are really not worth the trouble. They might not be so bad if they were not administered by complete morons. The people policing these plans are not trained tax professionals, that much became obvious to me very early on in the FSA I had last year. I was constantly fighting with them over things they were denying even though I know the things were acceptable under IRS rules.

You don't save much on your taxes and you potentially reduce your social security benefits later in life. You are better off taking the money that's being withheld for the FSA and putting it in a bank to earn interest until you need it. If you go over your standard deduction then you can itemize the expenses later (which you can't do using the FSA).

BTW, your employer could potentially have access to everything you submit to your insurance and FSA plan, so if the doctor's receipts say GID or something similar on them (like a diagnostic code for GID), they do at least have access to them even if it's doubtful they'd look them over.

Also, an FSA plan is *separate* from your insurance. It does *not* matter what your insurance does or doesn't cover. The only thing that matters for an FSA are the IRS rules, and they are different for FSAs than for itemized tax deductions. Your doctor visits are covered. Your HRT is covered.

If you have submitted the necessary information, there is no need for them to have any more information. I'd call them as ask them why it's a problem. Do not tell them you're trans, it's none of their business. Only ask why they are denying it when you submitted the proper information. If that doesn't get anywhere, submit the insurance claim form. If they still deny it, complain to your employer, because ultimately it is a transaction between your employer and you. The people administering the plan are just administering it for your employer.

There are some publications about FSAs on the IRS website. I can try to find them if you want (it's not easy, nothing dealing with the IRS is easy :\)

Posted by: Allie (jackcantdie)
Posted at: January 20th, 2010 10:18 pm (UTC)

You can access the money you put into FSA? My employer gives us the money on a debit card.

So that suggestion is completely out the window, at least in my case.

...Or is it not?

Posted by: hrolleif (hrolleif)
Posted at: January 20th, 2010 10:40 pm (UTC)

I only think I understand what you're asking, so I'll answer as best I can...

The money in your FSA account is technically your money that you agreed to have withheld from your pay to fund the account. If you don't want to participate in the FSA, you tell your employer at the beginning of the year (might be other than January 1 depending on when your employer contracts with your high-deductible insurance plan) that you don't want to participate in the FSA and you'll get your full pay rather than having that money deducted from your paycheck every pay period. I'm not going to swear to it, but I don't think they can force you to participate in the FSA.

Based on my own experience with FSA accounts and lots of advanced education on U.S. tax law, I would suggest skipping the FSA and putting the money in an interest-earning bank account instead. The only way I could imagine one of these accounts benefiting someone is if they earn a high income and could possibly spare themselves going into a higher tax bracket by signing up for an FSA. For most people middle income and lower, it's not going to be any benefit and may end up costing them. It will certainly be a huge PIYA if it's anything like mine was.

Posted by: Allie (jackcantdie)
Posted at: January 20th, 2010 10:15 pm (UTC)

Not sure what you have, but I have BCBS through my employer. And I also have that FSA account and had the same questions. This is what my HR person had to say about the IRS rules. (This is long, please bear with me.)

More specifically, the IRS considers gender reassignment "cosmetic surgery" rather than "medical care" as defined below:

I.R.C. § 213(d)(9)(A) provides that the term “medical care” does not include cosmetic surgery or other similar procedures, unless the surgery or procedure is necessary to ameliorate a deformity arising from, or directly related to, a congenital abnormality, a personal injury resulting from an accident or trauma, or a disfiguring disease.

I.R.C. § 213 (d)(9)(B) defines “cosmetic surgery” as any procedure that is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the
body or treat illness or disease.

Based on the above, the IRS concludes that the surgery (and related medications, treatments, and transportation) do not qualify for favorable tax treatment.

And if you ask me, that whole... "the IRS considers gender reassignment 'cosmetic surgery' combined with the definition of 'cosmetic surgery' as- any procedure that is directed at improving the patient’s appearance and does not meaningfully promote the proper function of the body or treat illness or disease" guideline or in their case, theory, is complete BS.

I was wondering if there is some way to challenge this, so I'm in the same exact boat that you are in.

It's lousy. =/

Posted by: hrolleif (hrolleif)
Posted at: January 20th, 2010 10:51 pm (UTC)

"I was wondering if there is some way to challenge this"

It has been challenged in tax court. We are still waiting the judge's ruling (2 years now as of tomorrow!!)


However, the stuff that your HR people sent you does *not* include doctor visits or hormone treatments, which are covered under FSA accounts.

Posted by: hrolleif (hrolleif)
Posted at: January 20th, 2010 10:53 pm (UTC)

Note: when I say "we" are still waiting, I don't mean to imply that I had anything to do with the case. I just mean we as the transgender community.

Posted by: Allie (jackcantdie)
Posted at: January 21st, 2010 04:42 am (UTC)

Btw, when you say, "However, the stuff that your HR people sent you does *not* include doctor visits or hormone treatments, which are covered under FSA accounts."- is this depending on the 'coding' that your doctor submits to insurance?

Or is this coverage a guarantee?

(Hoping to learn a thing or two by next year for the 2nd round...)

Posted by: hrolleif (hrolleif)
Posted at: January 21st, 2010 12:29 pm (UTC)

No, the law only excludes the surgery. There is nothing in U.S. tax law (that I know of) that excludes hormone treatments and doctor visits related to hormone treatments.

Posted by: Allie (jackcantdie)
Posted at: January 21st, 2010 04:37 am (UTC)

Oy. I've got myself in a hole, then.

I lowered the balance on my FSA account (so I know I *definitely* won't have enough to cover my testosterone prescriptions. Oh well, the balance is low enough that I could still benefit from it anyhow, for other non-trans related prescriptions and such.

I'd rather play it safe, though. I'm comfortable with paying out of pocket for all trans related treatment (but it does add up......*face/palm*). At least I have a little bit of help, even if it's not much.

The FSA account is a good tool for people who are horrible at saving (like me)!

And... if you find out any new news on the judge's ruling, please don't hesitate to share with us here in this community, I know I'll be waiting to see how it all pans out.

True, I could keep tabs on it myself but wouldn't really know where to begin looking aside from the link you provided.

Btw, hrolleif, thanks for your response. It was helpful for me. And other people, I'm sure! But I am a first-timer with FSA and all that, so ya know, I'm kinda learning as I go along.

Posted by: hrolleif (hrolleif)
Posted at: January 21st, 2010 12:36 pm (UTC)

Well if you're going to use the FSA, it's better to go with a lower balance than a higher one. That way you know you'll spend it all.

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