Inactive & remaining balance

[Sinamenone]

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

Good morning,
I'm currently on medical leave. My FSA Account was placed in active. I use my FSA Benefits Card for co-pays & prescriptions. How am I supposed to pay for these things? If I pay out of pocket, will I be reimbursed?
Also, I have over $500 left in my account. Due to the IRS' USE IT OR LOSE IT regulation I don't believe I'll return before 12/31/17. Is there any way or any loophole that will allow me to get this money back?
I'm not rich, I live paycheck to paycheck & I'm deeply disturbed & upset that I'm gonna to lose this money?
What recourse, if any do I have?

Thanks in advance

 

[PayrollHRGuy]

Your card should not have been on inactive status. Contact your HR department or whoever handles such things at your place of employment.

 

[cbg]

How, or if, you get reimbursed is a matter between you and your employer (or your FSA administrator). How to access reimbursements is not a matter determined by law. If you were on an unpaid leave, however, the likelihood is that you were not eligible to participate in the FSA during that time.

If there is money left in your account at the end of the year, there are a couple of possibilities, but it depends on how your plan is written. The IRS allows an employer to roll over up to $500 into the next year, but ONLY if it is written into the plan document that this will happen. The IRS also allows a grace period of up to two and a half months; i.e. you can use your 2017 money to pay for expenses incurred up to March 15, 2018, but again, ONLY if such a grace period is written into the plan document. The employer can use only one of the two above options; they must choose one, they cannot have both. They are not required to have either.

If they do not have either option, or if you are still unable to use the money despite the options listed above, then you lose the money. There's no other provision. Not even if.

 

[Sinamenone]

It is written

Good afternoon,

Thank you for your responses.

According to P&A Group,
Dates of service must be incurred while you are actively employed, it's in the Summary Description.

This is so ridiculous to me!

 

[cbg]

Why? The entire point of an FSA is to be able to use pre-tax money. If you aren't receiving a paycheck, they can't deduct any money pre-tax.

 

[Sinamenone]

Cbg

I didn't plan on being sick so to lose that money just took me for a loop

 

[cbg]

I understand that. But FSA's are highly regulated by Federal regulation. Most of what we've discussed is set by law, not by your employer.

Call your HR or Benefits office and see whether or not your employer has opted for either of the two possibilities I've outlined above, which would allow you to incur expenses in the early part of 2018.

 

[LdiJ]

I understand that. But FSA's are highly regulated by Federal regulation. Most of what we've discussed is set by law, not by your employer.

Call your HR or Benefits office and see whether or not your employer has opted for either of the two possibilities I've outlined above, which would allow you to incur expenses in the early part of 2018.

I am still confused about why being on FMLA (I assume medical leave is FMLA) causes someone's FSA to be suspended so that they cannot use money already accumulated. However, that will probably just be one more reason why I advise clients against FSAs.

 

[cbg]

If the employee is not collecting a paycheck, then how are the FSA contributions to be deducted?

As to using what's already there, you'll have to ask the IRS since it's their rule, not mine.

 

[LdiJ]

If the employee is not collecting a paycheck, then how are the FSA contributions to be deducted?

Well of course ongoing FSA contributions cannot be deducted.

As to using what's already there, you'll have to ask the IRS since it's their rule, not mine.

But the thing is, I do not think that the tax code has a rule that says that FSA previously accumulated funds cannot be used by someone on FMLA.

If someone else knows of something in the tax code that says that previously accumulated funds cannot be used by someone on FMLA then please feel free to cite that.

 

[cbg]

It's got nothing to do with FMLA specifically. It's any kind of leave, other than a short term leave of two weeks or less. It's not limited to FMLA.

 

[LdiJ]

It's got nothing to do with FMLA specifically. It's any kind of leave, other than a short term leave of two weeks or less. It's not limited to FMLA.

I have never liked the "use it or lose it" aspect of FSA accounts so I highly recommend against them anyway. This is just one more reason to do the same. Someone on medical leave needs access to their accumulated FSA funds almost more than anyone else does. If the law really requires them to be suspended, then the law is even worse than I thought.

 

[cbg]

Yes, the law really requires them to be suspended. Do I need to provide proof for you?

I have no strong feelings either way. Certainly they're not for everyone, and I encourage my employees to think very hard about how much value they will actually get from them. I actively discourage new hires in the last quarter of the year from signing up for them at least for their hiring year. Same with people who have qualifying events in the last quarter. I remind everyone of the use it or lose it feature, and the pros and cons are featured prominently in our materials.

But there's no question that they do produce a value in the right circumstances, and it's not up to me to tell my employees whether they should or should not enroll. All I can do is tell them the rules, make recommendations where appropriate, and let them make their own decisions.