(USA) Flexible Spending Accounts and Surgery

[Raya]

So my company's renewal period for our insurance is coming up. One of the options they offer is a Flexible Spending Account. All in all, it seems like a pretty sweet deal. They make the whole contribution available up front, and you save on income taxes. I really would like orchiectomy (and maybe some of the cheaper FFS) by the end of the year, so this seems really opportune.

Now, the literature lists a very broad range of covered expenses--and a pretty simple set of requirements for validating those expenses--but are all silent on the subject of us. And therein lies my problem. I really want to know what I'm getting myself into before signing up. Have any of you tried financing/reimbursing transition expenses (especially surgery) through an FSA?

My babbling begins below the line:

I guess my main questions are:

1. Do I even have to go through this at all? For one example, all the literature mentions sterilization as universally being an "eligible" expense, maybe I could/should go that route for my orchie and sidestep this whole mess...

2. How is trans care classified for FSA purposes? They have ineligible, eligible, and "potentially eligible" expenses. I've not seen much anything here.

3. Just what proof are they going to make me submit to get financing/reimbursement?

On one extreme, the literature says that all they even need for "potentially eligible" expenses is a single note from a (any?) doctor saying the procedure is medically necessary; other procedures don't need anything more than the receipt! 

But on the other hand, FSAs are governed by IRS guidelines. IAONAL, but my reading of the O'Donnabhain case is that it only applies positively to those of us who are SoC "complaint"--all deviations therefrom may be grounds for denial. My problem is that I'm not; I don't have any letters. My prospective orchi doc works on IC, so I don't need them to get the surgery. Now that my therapy is no longer (effectively) covered, chasing these letters could easily rival the cost of the orchie itself! This is only affordable because I sidestepped that money pit.



I couldn't find out much from the people who "handle" the FSA. All I know for certain is that attendant expenses (travel, lodging) will require a letter of medical necessity. So I could easily drop those from any claim if need be.

[MadelineB]

It's now treated like any other non-elective surgery, due to an official IRS ruling that it is a tax deductible medical expense. You will need your EOB or your itemized bill showing the provider and dates of service and the service provided, just like you would for some other eligible expense.


TransEquality has a good publication on FSA for transition expenses.
Here's the link to the PDF:
http://transequality.org/Resources/FSA_resource.pdf


Note that the maximum of $2500 per year got delayed, so rather than 2011, it begins 1/1/2013 I believe. So this will probably be the last chance you will have of having an FSA balance under the old rules.

[Constance]

I asked HR about this, and they advised me to contact the company's broker. The broker told me that "transgender services" were excluded from the HSA/FSA offered by my employer.

So, I'd say check with HR and ask to contact your employer's broker.

[MadelineB]

IRS Acquiesces to U.S.Tax Court Holding that Gender Reassignment Surgery is a Tax Deductible Medical Expense
November 2011
by Jennifer B Chung
http://www.truckerhuss.com/articles/view_article.cgi?class=hot_topics&article=News/20111101_Gender%20Reassignment%20Surgery%20is%20a%20Tax%20Deductible%20Medical%20Expense.txt

In 2010, the U.S. Tax Court held in O'Donnabhain v. Commissioner, 134 T.C. 34 (2010), that expenses for gender reassignment surgery and hormone therapy to treat gender identity disorder ("GID") are tax deductible under Section 213 of the Internal Revenue Code ("Code"). On November 2, 2011, the IRS announced its intent via a "notice of acquiescence" that it would abide by the U.S. Tax Court's decision in O'Donnabhain.

On February 2, 2010, the U.S. Tax Court overturned the IRS policy of disallowing tax deductions for treatment of GID. The court found that GID is a "disease" within the meaning of the Code, and that reassignment surgery and hormone therapy are an accepted treatment regimen for GID. The court allowed a deduction for the genital reassignment surgery and hormone therapy, but disallowed a deduction for the breast augmentation (in O'Donnabhain's particular situation) on the basis that it was cosmetic surgery undertaken "merely to improve appearance." The court noted the IRS could appeal the case to the U.S. Court of Appeals for the First Circuit.

On November 21, 2011, the IRS issued Action on Decision No. 2011-3 acquiescing with the O'Donnabhain decision and stated that it will no longer take the position reflected in Chief Counsel Advice 200603025. (Also see Internal Revenue Bulletin No. 2011– 47.)



IRS Allows Sex Change Surgery To Be Tax Deductible For Transgender Taxpayers[/size][/left]
First Posted: 11/11/11 02:46 PM ET
Updated: 11/14/11 05:42 PM ET
Huffington Post
http://www.huffingtonpost.com/2011/11/11/irs-sex-change-surgery-tax-deductible-_n_1088767.html

In what many have deemed a historic measure, the Internal Revenue Service announced this week that it would allow transgender taxpayers to deduct the cost of gender reassignment surgery from their taxes as a medical expense.

As Time is reporting, IRS officials announced its intent, via a "notice of acquiescence," to abide by a 2010 decision that held that some medical expenses from such surgeries could be deducted from income tax filings.

[Raya]

IRS Acquiesces to U.S.Tax Court Holding that Gender Reassignment Surgery is a Tax Deductible Medical Expense

Yeah, I kind of addressed the O'Donnabhain case in my second to last paragraph. One of the reasons they accepted her deduction for SRS is because she produced documentation showing she was SoC complaint. The deciding factor for why they rejected her breast augmentation deduction is because she couldn't.

My concern is that I'm not SoC complaint; my surgeon's doing this on IC.

I'm going to see my endo next week. Chances are decent I can get him to sign off on this. If I need documentation, hopefully that will be enough...

[MadelineB]

I'm not an attorney or an etc etc, this does not constitute advice etc etc.


I just work for a large FSA third party administrator. This is not their opinion but mine.


All the FSA administrator cares about is: does the IRS recognize this as an eligible medical expense?


So the details of the original court case aren't important. Have you looked at the relevant Internal Revenue Bulletin? That would be your bible.

[cindianna_jones]

No matte what you do in this process.... always get your ducks in line. Shortly before I had my surgery, there were some court cases where the plaintiffs won reimbursment. I won't go into all the details of my experience, but I did get most of mine paid for by my insurance company. My insurance company did not explicitly exclude GRS. I was lucky. They do now.

We need to be very careful in everything legal. If you can get legal aid to help you along the way, so much the better. I had a lawyer at a very critical time and he saved me.

Cindi

[Raya]

I just came back from my doctor, actually. They said they'd be more than happy to both refer me and write a letter for me!

Which is great, because I finally got an answer from the FSA folks. As for what they said, let's just say I heard the words "cosmetic" far more than I cared to... It's nothing I can't get around, though.

I just wanted to say thank you to all of you who've responded. It's so infuriating just how little legal acknowledgment of trans *anything* there is out there. I feel really lucky in that I've been able to transition with little resistance from the medical and legal establishments. Nothing makes my stomach turn more than the thought of dealing with both!

I feel a lot better about this, now. 

[msrobyn-alice]

Hi Raya,


Just wanted to add that to date I've had no trouble with using my FSA for transition-related expense.  This has included both counseling and speech therapy along with blood tests and checkups at Whitman Walker in Washington.  What the federal government's health insurance plans specifically exclude, the FSA seems to have no trouble including.


Good luck!
Robyn

[MadelineB]

One thing that helps with backward FSA administrators is something from your doctor called a "letter of medical necessity".