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)