Loss of Flexible Spending Acct due to employer misinformation

[mah88]

What is the name of your state? TX

I left my previous company in June 2006.
During my exist interview I asked about my flexible spending accounts (child care and medical) to find out what deadline I had to spend that money and to submit receipts for reimbursement.

At the time I was told (verbally) that expenses could be incurred any time in 2006 and that receipts needed to be submitted before the end of March 2007.

In January 2007 I submitted receipts to get reimbursement from my flexible spending account. Most of these expenses were incurred before my last date of employment, some were after my last date of employment.

A couple weeks later, I received a letter from the flexible spending account administrator (ADP) rejecting my claims because they were submitted after the deadline.

I called ADP and was informed that all costs must have been incurred before my last date of employment and all receipts submitted within 30 days of my last day of employment.

Following I called and spoke to the same HR specialist that conducted my exit interview and asked her about my flexible spending account deadline. Again, she replied that I could incur costs until the end of 2006 and had until the end of March 2007 to submit my receipts. I recorded this conversation. I did not tell her (at first) that my claims had already been rejected.

This HR representative then referred me to an HR coordinator at corporate headquarters (in California) to "get my money back", but this person has not been returning my calls.

I have scoured the written material given to me in my exit interview and nowhere is the flexible spending account mentioned.

I feel that I was misled by my former employer, they should have known the policy and because I relied on their wrong information I am now looking to lose over $3,000 in flexible spending reimbursements.

If I had known I needed to incur the costs before my termination date, I have alternate receipts from that time period that I could have submitted.

What recourse do I have? and with which party (my employer or the benefits provider)?

I know that if one does not spend the money allocated to a flexible spending account, they lose it. But who keeps the money in that case? The employer? The insurance company? The IRS?

Who sets the conditions on when costs must be incurred and ? Is it set by tax law, benefit provider policy, or employer policy?

Thanks in Advance

 

[Beth3]

Who sets the conditions on when costs must be incurred and ? Is it set by tax law, benefit provider policy, or employer policy? A combination of federal 125B reg's and the employer. Unless you continued your participation in the Flex Plan following your termination (and your employer SHOULD have provided you COBRA information on that), then eligible expenses must be incurred on or prior to your last day of employment and then you only have a specific amount of time to send those to the administrator for reimbursement. The 30 day period (or 60 or 90) will be stated in the Plan Document.

Your HR representatives should have given you the correct information but even if they erred, the Plan Document prevails and it's your responsibility as a participant to know what the provisions are.

Money remaining in a Flex Plan after the submission deadline following the end of the Plan Year reverts to the employer. Typically, there is seldom much, if any, monies left and if there are, they're used by the employer to off-set Plan administration costs.

If your employer did not send you COBRA continuation information regarding the Flex Plan, then you may have some leverage and you may wish to speak to an employment law attorney. The employer may be willing to reimburse you for your eligible expenses out of their own pocket rather than have you file a complaint with the federal Department of Labor over the COBRA violation.

 

[mah88]

Thanks Beth3

I will take a closer look at the COBRA information I received. I had not idea it was connected to flex spending accts.

If the employer keeps the money and is not liable for providing false information, wouldn't that give them incentive to give employees misinformation -- so that these sorts of situations will occur?

If my HR rep hasn't read the policy and doesn't understand the regulations, how can I be expected to?

 

[Beth3]

If the employer keeps the money and is not liable for providing false information, wouldn't that give them incentive to give employees misinformation -- so that these sorts of situations will occur? In theory, but since every participant must receive a copy of the Flex Plan Document and Flex plan administrators usually distribute a ream of their own documentation to participants with all the ins and outs, and Plan-specific detail is frequently available on the employer's intranet site (if they have one) or on the Plan Administrator's site, this would be a very foolish thing to do and I've never heard of it happening. The correct information is just too readily available.

If my HR rep hasn't read the policy and doesn't understand the regulations, how can I be expected to? Because you are.

 

[ecmst12]

If my HR rep hasn't read the policy and doesn't understand the regulations, how can I be expected to? Because you are.

Or more to the point, because you're the policy holder, and it's your responsibility. You could have contacted the company administrating the FSA at any time to get the accurate information. You held onto these receipts for 6 months after the charges were incurred instead of submitting them right away, also your choice. It's expected that the policy holder reads the plan document and directs any questions to the proper place (which is usually not HR but the company managing the benefit being questioned).

 

[ShyCat]

fer, start your own thread. And please stop necroposting.

 

[ecmst12]

Follow instructions. START YOUR OWN THREAD if you want comments.