Q.- We have a calendar year health FSA. An employee purchased contact lenses in December 2013. He got the bill for the lenses and paid the bill in January 2014. He submitted his claim for the expenses to be paid from his 2014 FSA, but it was denied. Is this denial correct?
A.- Yes. The expense is properly denied. The Internal Revenue Code provides that a medical expense is incurred when the employee is provided with the medical care that gives rise to the expense, and not when the employee is formally billed, charged or pays for the care. The employee was fitted and received the contact lenses in 2013. The expense may be paid from his 2013 FSA, even though he actually paid the bill for the lenses in 2014.