FSA after Lay-Off

[Sue Richmond]

What is the name of your state (only U.S. law)? KY
Can someone tell me how the law reads as far as using your FSA account funds following Lay-Off? My old employer voided my FSA Debit card without prior notice and now tells me only charges incurred prior to my lay-off date (2/23/09) will be honored yet they deducted my usual contribution out of a final check I received on 3/6!
I still have over $800 on account - is this legal what my frmer employer is telling me? Can I "withdraw" the funds in my account (paying applicable taxes of course)?

 

[Beth3]

Your employer is obligated to extend COBRA to you for the Flex Plan. If you elect that option, that means you would need to continue to make your usually monthly contribution (now via a personal check) but you get additional time to incur eligible expenses.

yet they deducted my usual contribution out of a final check I received on 3/6! That was correct for them to do. (a) You signed a salary deferral agreement when you joined, authorizing "X" dollars be contributed pre-tax from every paycheck, and (b) the check you just received was for time worked prior to your layoff.

Can I "withdraw" the funds in my account (paying applicable taxes of course)? No. This is specifically prohibited. Flex funds are "use it or lose it" and funds can only be withdrawn by presenting eligible expenses. As you have $800 in your Flex account, take advantage of the COBRA option so you have additional time to incur eligible expenses and be reimbursed.

 

[ecmst12]

You have $800 CONTRIBUTED but UNUSED? Or you had $800 left including the scheduled contributions that you had not made yet?

If you have $800 in actual unused contributions, then you can submit manual claims for I believe 90 days until it is used up, then anything not used will be lost. But it's normal for the card to be deactivated.