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This year is our first year using an FSA. We don't typically use the doctor, and our daughter's nursery school expenses are fairly small. This year, however, my husband needs some dental work, and we were convinced of the tax savings on this money, so we signed up. Essentially, it worked out that we would save enough in taxes that our daughter's child care would be "free".

Well, it was good in theory, I suppose.

In January, we got our first check. Hmm. We hadn't filed for reimbursement on anything, as we had no expenses at that time. I looked on the statement, and it said RX0039 or some such. Looking at the cost, I determined that we had just been reimbursed for my son's medications. He is disabled, and take seizure medications. The date was the same as when I had his prescription filled. We figured that it was hooked to our insurance somehow.

The problem comes because he is also on TEFRA Medicaid. We pay ~$40 to the state each month as a premium, and they cover all his medical bills after our primary insurance pays. We called up the FSA company, and explained this to them. The lady my husband spoke with told us not to worry about this first check, as it was so small (around $60), and that we'd use that amount soon anyway. We just shouldn't file again until we'd spent that much. She also put a note in our account about our son's medicaid, and told us they would not file anything until we sent in a claim form manually.

Imagine my shock today then, when I opened the mail and got a check for over $1000! I was expecting a check for my daughter's child care from them, but definately not for medical expenses! It seems, that once again, they had pulled the information from our insurance, and paid us back for my son's physical and occupational therapy for the last month.

While seeing that amount made me grateful at how much Medicaid helps us out, now I don't know what to do about this check! We are only allowed a $2000 medical FSA, and we were just reimbursed over half of it, for medical expenses we didn't have. Having this money in hand makes me very tempted to pay off a credit card, but I don't think that's a good idea :). Another thought is to put it in our savings account until we do need it for medical expenses.

I can guarantee that my husband will never have another FSA account again, which is too bad. And, it makes me look bad for telling him how great it would be :(.

So, does anyone have any advice as to what we should do about this reimbursment for medical expenses we didn't have?

Thanks so much!
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