Can I hold employer to terms emailed to me?

[mrbmrb]

What is the name of your state (only U.S. law)? Virginia

During an exit interview with my previous employer, an HR representative told me I could continue to use my Dependent Care FSA throughout the year. I followed up with an email to confirm, and she replied with the policy in writing (emphasis is mine).

"I apologize for any confusion, below is from our Summary Plan Description, outlining what happens to your flexible spending accounts upon termination. Based on this, you have the ability to submit medical claims for expenses incurred through the period for which payments to the FSA have already been made, which is March. For the Dependent care, you can continue to submit claims through the plan year.

What happens if I terminate employment?

If you terminate employment during the Plan Year, your right to benefits will be determined in the following manner:

(a) You will remain covered by insurance, but only for the period for which premiums have been paid prior to your termination of employment.

(b) You will still be able to request reimbursement for qualifying dependent care expenses incurred during the remainder of the Plan Year from the balance remaining in your dependent care account at the time of termination of employment. However, no further salary redirection and Employer contributions will be made on your behalf after you terminate. You must submit claims within 90 days after the end of the Plan Year in which termination occurs.
..."​

When I tried to use the account the month following my separation with the company, the FSA provider's website wouldn't allow me to enter the expense. I contacted the HR department again and now they say I could only use the account while actively employed. After some back-and-forth, they sent screenshots of other documentation stating I have to be actively employed. I don't have access to those documents now and I don't have copies of what they said at the time of my employment. The most current information I had was the policy above that they emailed me.

There is no IRS regulation that I've seen covering what happens to a Dependent Care FSA after termination of employment - only that it must be used within the same plan year. This seems to be up to the employer, so I think the terms stated to me are valid. Also, the Dependent Care FSA is not pre-funded by the employer - it only contains funds that were withheld from my income.

Can I hold them to the statements and policy they gave me in writing during my out-processing?

 

[cbg]

It's going to come down to what's in the SPD. You are entitled by law to a copy on request. I would be sure to make it a written request, preferably in some traceable format. If the SPD says that you can continue to incur expenses throughout the year after termination, then you can. If it does not allow for that, then it's a shame you were given wrong information but you cannot hold them to it. They MUST follow what is in the SPD.

 

[mrbmrb]

When would changes to the SPD come into effect? In emails since, they have stated that they "are in the process of updating the SPD." So the version they had when we separated stated what I quoted above.

They claimed "We do not create the SPDs, we receive them from the carriers." and

"We have followed up with our insurance broker and the changes were made effective on 1/1/16; however, we only received the updated 2016 SPD from Discover with the changes last week [at least a month after my last day]. SPDs for current plan years are typically delayed and companies do not typically receive them until a few months into the plan year."

So are they held to the SPD they have in writing at the time of my last day or the one that didn't exist until a month after my last day?

Also, how would you advice making sure my written request is a traceable format? email?

Thanks for your reply!

 

[cbg]

The law allows HUGE time frames when changes are made to the SPD. The last time I looked, which admittedly was some time ago, they had seven and a half months from the effective date to do all the administrative changes. If the SPD was changed as of 1/1/16, then that's the one that was in effect if you left at any time on or after that date, even if they had not yet received the updated copy.

I was suggesting asking for it by certified mail or even email with a read-receipt notice, but they're going to be held to the 1/1/16 version, no matter when they received it with relation to your last day and no matter what you were sent in writing. It would be nice of them to make an exception for you but the law will not force them to and they could conceivably be fined when they are audited (it is not if they are audited; it is when they are audited. All employers are audited regularly with regards to qualified plans such as this, and the IRS regs are very strictly held to) so it is not likely (not impossible, but not likely) that they will do so.