I need help w/ Flex Spending Account!

[staceyfe]

OK here's the story: DH employer is in the process of selling. The deal should be closed in the next week or two. We set aside $4800 for medical flex spending (I'm having eye surgery next week). It is divided over 26 paychecks. Well, since the company is changing, we're not sure how it will affect the flex.

I do know the new company offers flexible spending. I spoke w/ the new company's HR director (I think she may be over the whole company, and not just a territory) and she informed me that the new company would take over payroll and assume all deductions made from an employee's check. I told her of my impending surgery and she acted like there would not be a problem. But DH talked w/ a guy from the current company today (also HR), who told him he thought the flex would end with the current company (2 paychecks = $372) and he would sign up again with the new company. What this means is current money being deducted has to be spent before the termination date. The new date will be *after* my surgery. ARGGGGGGGGGG!!! To top it off, I may have the option to go ahead and sign up for flex through my employer (for '06) tomorrow only.

I'm so confused. I really don't want to lose the tax savings from my surgery. Are there any HR people out there who've been involved with a company sale that can help me?

ETA: we did not know of the sale until Jan 2.

 

[mickeyfan2]

Call a tax accountant.

 

[figment52]

That is a toughie. Your best resource is the HR department. These plans are highly regulated by the IRS.

If you have your summary plan document from the "current employer" it may be addressed there ... look for 'plan termination.'

There may also be a "grace period" that allows for eligible expenses incurred X number of days after the plan year "ends." Since the employer would have to declare unused withholdings as income at year end (plan termination) there is most likely a provision for the transfer at the sale.

This is not legal advise or interpertation just experience in HR. Get on the phone first thing tomorrow and get it clarified.

eta- you may not have known about the sale until 1/2 but the parties involved did and this should have been addressed at the company level.

 

[staceyfe]

eta- you may not have known about the sale until 1/2 but the parties involved did and this should have been addressed at the company level.

Yes, we had to sign up by 12/9. Had I known of the sale, I would have flexed the whole thing through my employer and saved myself the headache. How come companies can't be honest?

I forgot to mention both my HR person at my employment and the HR person a DH's new company told me it would be fine if there was no plan break (lapse). I'm still not convinced I'm not gonna get screwed.

 

[golfgal]

Dh went through a corporate buy out about 5 years ago and everything transferred from one company to the next. Because of the timing of their sale we had to sign up 3 separate times for benefits, we knew this would happen, but everything transferred smoothly. Keep a record of what you have now, what you deducted and any claims made (which aren't any I would assume since it is only 1/5). If there are any questions down the road you will have your paperwork to fall back on.

 

[Caradana]

Can you get HR to give you assurance on paper - maybe by sending them an email and requesting a reply? That will go a long way legally, if you do get screwed.

 

[mafibisha]

I'm so happy to see this thread!

Would someone be so kind and explain this Flexible Spending Account to me?

I'm a novice (so is DH) and really don't understand the whole concept. Heard we're getting one through work and don't want to look too stupid

Any info or summary you could give would be greatly appreciated.

Thanks in advance!

 

[golfgal]

I'm so happy to see this thread!

Would someone be so kind and explain this Flexible Spending Account to me?

I'm a novice (so is DH) and really don't understand the whole concept. Heard we're getting one through work and don't want to look too stupid

Any info or summary you could give would be greatly appreciated.

Thanks in advance!

Basically what it is is a savings account of sorts for medical or day care expenses. You elect to take out X number of dollars each year, say $1000. Over that year as you accrue eligible medical expenses like co-pays, out of pocket costs for medicines, some over the counter medicines are covered, too, eye glasses, etc. you submit those expenses to the provider of the Flex plan and they reimburse you. The benefit of doing this is that the money taken out if PRE-tax dollars so it reduces your taxable income, thus saving you money on taxes or increasing your refund.

Two years ago I needed new hearing aids, we flexed out the max our company would allow, $5000, and I got new hearing aids in January. We put the claim in for those then and got the money back before we paid the bill for the dr for the hearing aids. We continued to have the money taken out of DH's check for the remainder of the year.

This year we flexed out $5000 to cover DS's braces. Dh took a new job, unexpectedly, in September. We had already submitted claims for the braces and had used up our $5000 even though we didn't contribute the full $5000. That is the chance a company takes. If you don't use all the flex money that year, you lose that amount. Often, though, even losing some money at the end of the year means you will come out ahead of the game with the tax deduction.

 

[DawnCt1]

This year we flexed out $5000 to cover DS's braces. Dh took a new job, unexpectedly, in September. We had already submitted claims for the braces and had used up our $5000 even though we didn't contribute the full $5000. That is the chance a company takes. If you don't use all the flex money that year, you lose that amount. Often, though, even losing some money at the end of the year means you will come out ahead of the game with the tax deduction.

Last year I knew I was getting laid off. I submitted bills in excess of my contributions also.

 

[SC Minnie]

Our company was bought 3 years ago and benefits continued seamlessly. There was no change in the flex account or anything. I agree with the previous poster than says to get it in writing from the NEW company's HR person. They should know the policies. The former co's HR person may no know everything about the new co.