Flexible Spending Question--DH quitting job

[emdav]

DH plans to give his two week notice tomorrow. The 2011 FSA has been fully reimbursed. The 2012 medical FSA election was in excess of $3000. I don't remember the exact amount. There will be one paycheck for 2012 which will result in an FSA deduction.

My understanding is that all $3000 should be available to spend as of January 1st. Does anyone know if I have to submit for reimbursement prior to the last day of work or do services just need to be rendered by then? I would like to make a few appointments for the first week of January if it's to our advantage. I need new contacts!

 

[SandrA9810]

Well it's not like they take all $3000 out of the first paycheck, only 1/52 of that. All services have to be rendered before the last day of work, it might even be a bit longer than that.

 

[sookie]

DH plans to give his two week notice tomorrow. The 2011 FSA has been fully reimbursed. The 2012 medical FSA election was in excess of $3000. I don't remember the exact amount. There will be one paycheck for 2012 which will result in an FSA deduction.

My understanding is that all $3000 should be available to spend as of January 1st. Does anyone know if I have to submit for reimbursement prior to the last day of work or do services just need to be rendered by then? I would like to make a few appointments for the first week of January if it's to our advantage. I need new contacts!

On everything I say below - its just my own experience. Check with your plan tomorrow.

You will have those expenses taken from your last paycheck in the regular allotment amount. To break even, you will need to incur some expenses after January 1 that will equal (or exceed) what will be taken out of his last paycheck you receive after January 1.

And actually - if you took out 3k and incurred (and asked for reimbursement) of the 3k BEFORE he separates - sometimes that is all available January 1st and could actually come back to you. So if you need glasses, dental work, etc - maybe you can try to get that done and reimbursed back to you before he separates so you can use what is going to be taken out of your account for that first pay period in January 2012. However, any expenses that are incurred after his separation date are usually not covered.

I did a job change mid-year 2011 this year. However, we had had a high expense year due to some illnesses, and I ended up having everything for the whole year dispensed from my account very early in 2011. Thankfully, I did not have to pay the excess back I received under my plan. That is the same for most plans apparently. It was a godsend!!

If I were you, I would try to pay for all your expected co-pays at the time of service that first week in January. Pre-pay for your contacts if they are ordered. Get your RX's filled. Get your glasses and pay for them if they are being mailed to you. Try to turn as MUCH of it as you can in before he separates from his job!! Otherwise, you can try to get the money back to yourself after the fact - but that might be harder especially if you end up exceeding (in cost to you) what he put in.

 

[Luv Bunnies]

DH plans to give his two week notice tomorrow. The 2011 FSA has been fully reimbursed. The 2012 medical FSA election was in excess of $3000. I don't remember the exact amount. There will be one paycheck for 2012 which will result in an FSA deduction.

My understanding is that all $3000 should be available to spend as of January 1st. Does anyone know if I have to submit for reimbursement prior to the last day of work or do services just need to be rendered by then? I would like to make a few appointments for the first week of January if it's to our advantage. I need new contacts!

I hope I'm understanding your question correctly.

Here's the way I understand FSAs to work: The amount for the entire year ($3000 in your case) will be available for qualified purchases starting on January 1. That's assuming your DH stays at the job and makes contributions for the entire year. However, if your DH quits his job, you are only entitled to withdraw the amount he actually contributes. If you withdraw more than that, you will have to pay it back and, in that case, you won't have the tax advantage. It's basically a tax-free savings account consisting of your money. If you overdraw the account, you will have to pay it back.

 

[Handbag Lady]

Perhaps it really depends on your plan. At our work, the entire $3000 would be yours to spend at your leisure in 2012 (our medical spending for 2012 is from 1.1.2012 to 3.15.2013) as long as you get one paycheck in 2012.

You would not have to pay in any more than that deduction from that first paycheck.

 

[Luv Bunnies]

Perhaps it really depends on your plan. At our work, the entire $3000 would be yours to spend at your leisure in 2012 (our medical spending for 2012 is from 1.1.2012 to 3.15.2013) as long as you get one paycheck in 2012.

You would not have to pay in any more than that deduction from that first paycheck.

OP, definitely check with your DH's benefits department before making any decisions, because you're getting some conflicting information from those of us who have responded.

If you're talking about a Flexible Spending Acccount (FSA), my understanding is that you are saving and spending your own money. The advantage is that you are able to put a certain amount away from each paycheck before it is taxed. You can withdraw the money before you have fully funded the account, however, you have to keep making the contributions. It is possible that some companies cover the entire amount if the employee quits the job before the account is fully funded. That may be what some of the other posters are referring to (I've never heard of companies doing this, but I suppose it's possible). I worked in HR for 7 years, and I recall that if an employee had withdrawn more than they had paid into their FSA when they terminated their employment, the plan administrator would bill the employee for the overage. It's basically a savings account that contains your own money. You can use it to pay for qualifying medical expenses. If you don't put the money into the account, it's not yours to spend.

 

[silmarg]

I am pretty sure the OP can put in $3000 and get reimbursed for it. Even though DH only paid in a fraction of the $3000.

I think the medical service must be performed before the separation date.

Do let us know how it works out.

 

[itutorfortravel]

Just wanted to put in my 2 cents...

My DH quit his job in October and we had depleted what we had planned to put into our 2011 medical FSA for the entire year by that time. We should have actually put in about another $500 or so based on the # of paychecks DH would have had left for the year. We did not have to pay anything back.

 

[aprilgail2]

Well it's not like they take all $3000 out of the first paycheck, only 1/52 of that. All services have to be rendered before the last day of work, it might even be a bit longer than that.

That also depends on the company-mine doesn't take out the first two paychecks or the last two paychecks so its broken up into 48 payments!

 

[Kellydelly]

OP, definitely check with your DH's benefits department before making any decisions, because you're getting some conflicting information from those of us who have responded.

If you're talking about a Flexible Spending Acccount (FSA), my understanding is that you are saving and spending your own money. The advantage is that you are able to put a certain amount away from each paycheck before it is taxed. You can withdraw the money before you have fully funded the account, however, you have to keep making the contributions. It is possible that some companies cover the entire amount if the employee quits the job before the account is fully funded. That may be what some of the other posters are referring to (I've never heard of companies doing this, but I suppose it's possible). I worked in HR for 7 years, and I recall that if an employee had withdrawn more than they had paid into their FSA when they terminated their employment, the plan administrator would bill the employee for the overage. It's basically a savings account that contains your own money. You can use it to pay for qualifying medical expenses. If you don't put the money into the account, it's not yours to spend.

I believe you are giving wrong information. With a health flex account your employer immediately makes available to you the entire amount you set before the year begins (not sure about the one paycheck rule). If you leave during that year and have spent the funds, you are ahead of the game. You don't have to pay it back. If you have a health savings account, that is different. We have one of those right now. We can only spend the funds that have already accumulated in it, and the funds roll over each year, we don't lose any of it if we don't spend it. I don't think it is particularly moral to go spending funds you have not contributed to, but that is the OP's choice to make.

 

[ancestry]

I hope I'm understanding your question correctly.

Here's the way I understand FSAs to work: The amount for the entire year ($3000 in your case) will be available for qualified purchases starting on January 1. That's assuming your DH stays at the job and makes contributions for the entire year. However, if your DH quits his job, you are only entitled to withdraw the amount he actually contributes. If you withdraw more than that, you will have to pay it back and, in that case, you won't have the tax advantage. It's basically a tax-free savings account consisting of your money. If you overdraw the account, you will have to pay it back.

Our doesn't work like this. The full amount of the contribution is availabe immediately. If we quite or leave the company we do not have to repay it. The company has to eat whatever we don't contribute due to termination of employment.

 

[mistysue]

We ended up doing this with DH's FSA this year. We spent the entire amount, but only had to pay in 1/2 of it. (laid off in June) I've been kicking myself all year for only electing to put $300 in! We spent it all in January.

 

[HM]

My DH's business was bought out by another company and moved to another state in June 1995. We opted not to make the move as the new city cost twice as much and they weren't going to raise salary. We were told by the HR dept, to go ahead and get as much of our medical stuff taken care of and reimbursed up to the amount for the year before the end of June, as the company would have to cover the portion that we did not put in. It was like a little bonus!

 

[disprincessatheart]

Spend as much as you can before his last day of work. You can submit the forms later. We did this in 2010 when I got laid off and again in 2011 when dh changed jobs. Fsa are at the employers risk. Many more people don't use all their funds vs ones who overspend bc they leave the company before making contributions equal to what they spent. You do NOT have to pay them back for the difference btwn yur contributions and what you spend.

 

[ccgirl]

It depends on the company.

While the entire amount we elected is available on the card on January 1st, if we leave the company and use more than we elect, we need to pay it back. It automatically comes out of our last check. If the total dollar amount exceeds the last check, we have to write a check for it. I guess my company doesn't want to give us free money.

 

[diznee25]

DH plans to give his two week notice tomorrow. The 2011 FSA has been fully reimbursed. The 2012 medical FSA election was in excess of $3000. I don't remember the exact amount. There will be one paycheck for 2012 which will result in an FSA deduction.

My understanding is that all $3000 should be available to spend as of January 1st. Does anyone know if I have to submit for reimbursement prior to the last day of work or do services just need to be rendered by then? I would like to make a few appointments for the first week of January if it's to our advantage. I need new contacts!

This is definitely a question for your DH's HR person. Each company is different so this is the best way to get the most accurate information.

At the company I used to work for, I know that HR person would be pulling out her hair if I didn't come to her with that question!

diznee25

 

[kaytieeldr]

If you're talking about a Flexible Spending Acccount (FSA), my understanding is that you are saving and spending your own money. The advantage is that you are able to put a certain amount away from each paycheck before it is taxed. You can withdraw the money before you have fully funded the account, however, you have to keep making the contributions. It is possible that some companies cover the entire amount if the employee quits the job before the account is fully funded.

I know this is how my employer handles it. If you can spend the entire $3,000 before his last day of work - braces or other major dental work; corrective eye surgery or glasses for the whole family... - using his Flexible Spending Account Funds, you're golden. Employers are aware this can happen, by the way, when they provide this benefit. More likely is that employees will leave funds unused (I'm going to be getting several pairs of glasses this week just to avoid that).

A Health Savings Account like someone else described is entirely different.

 

[sookie]

This is definitely a question for your DH's HR person. Each company is different so this is the best way to get the most accurate information.

At the company I used to work for, I know that HR person would be pulling out her hair if I didn't come to her with that question!

diznee25

why would she be pulling her hair out?

 

[emdav]

Thanks for the advice everyone! I typed out a long reply and it disappeared. Since there were differing opinions posted, I did a bit of research and IRS Publication 969 addresses FSA's. The entire election amount has to be made available at the beginning of the year and there is no provision for the employer to seek reimbursement. Of course an employer can ask, but there is no legal standing.

I'm making appointments. Next week should prove busy!

 

[chicagodisneyfan]

Thanks for the advice everyone! I typed out a long reply and it disappeared. Since there were differing opinions posted, I did a bit of research and IRS Publication 969 addresses FSA's. The entire election amount has to be made available at the beginning of the year and there is no provision for the employer to seek reimbursement. Of course an employer can ask, but there is no legal standing.

I'm making appointments. Next week should prove busy!

I don't understand how you can morally take advantage of monies you are not entitled too? You know you will not pay for the benefit!

It wold be different if you used the program in good faith and then resigned but you are purposely trying to get something for nothing.