Employee enrolls for next year's (2000) Health Care Flexible Spending Account.
Employee will receive her braces in February of 2000. At this point if employee pays her balance in full she will receive a 15% discount on the total price of her Orthodontics bill. Employee will be prepaying for a whole year's worth of Orthodontic visits. Is this Koser? I would appreciate any help here. Thanks!

Is the treatment only 11 months long?

Thank you Lisa for your promptness. I spoke with the employee this am and she is estimating 18 months for the Orthodontic treatments. I hope this helps. Yvette

Remember it is when the service is rendered not when formally billed, charged, or paid that determines the date of service. The service must be claimed during the plan year for which it is incurred, therefore; 18 months of treatment must be claimed over the two plan years it spans. A copy of the treatment plan and the contract should detail the banding and monthly costs.

You might want to subscribe to a legal guide such as the one put out by the Employee Benefits Institute of America or partner with one of the companys that specialize in 125 Plans, so that this expertise is readily available.

The BNA Tax Management Portfolio on cafeteria plans is also quite helpful.

I agree with Lisa; it is when the service occurs. But I have talked with Harry Becker from the IRS Benefits division on this subject before. He said there is some lattitude with orthidontia work and agreed that the entire amount could be applied in the first year.

------------------

Thanks Kirk,
I hate to sound dumb, but where I might find this BNA Tax Management Portfolio on cafeteria plans. I could really use reference to one about now. Thank you in advance for your help.
Yvette

------------------