Mothering Forum banner

1 - 15 of 15 Posts

·
Registered
Joined
·
9,290 Posts
Discussion Starter · #1 ·
For the past few years, we've been using dh's FSA to help manage medical expenses. His new benefit year just started and we increased his FSA contributions to cover dd's upcoming orthodontic work and ds2's upcoming dental work. Our contributions will be around $3k when it's all said and done, about $125/check pretax to cover everything we need.<br><br>
The question I have is this- I know that we have access to the FULL amount immediately, even if we haven't technically made the contributions. I also know if he leaves this company, he's eligible for a refund or credit or to at least use up any funds he's deposited into the account that we haven't used yet. BUT, what if we use more than he's contributed at the time he leaves that employment. How does that get paid back?<br><br>
I'm asking because dd's orthodontic appt is the end of the month and dh isn't sure he's going to be working there more than a month or so more (he's been there 6 years, but there's talk of outsourcing). I don't want to spend this money not knowing, but dont' want to put it off unnecessarily, either.<br><br>
So, anyone know what happens if he leaves before making enough contributions to the FSA to cover what we've used?<br><br>
Thanks!!!
 

·
Registered
Joined
·
4,964 Posts
There is no such thing as a free lunch, nor free orthodontia...<br><br>
If he leaves the company having spent $3000 in the FSA, but only contributed $300, he can expect to pay the difference. But exactly how that is done is a question you might (or might not) want to ask HR.<br><br>
You could ask the orthodontist for a monthly payment plan. That way if you leave the company, you do not owe the full amount all at once.
 

·
Registered
Joined
·
505 Posts
OHT, but, this is what I do for a living. PM me and remind me and I'll give you a detailed answer. I just don't want to forget about you!!
 

·
Premium Member
Joined
·
1,550 Posts
His employer can deduct the full amount still owed from his last check or they can make arrangements for him to pay it back over a short time. He will have the pay it someway or the other.
 

·
Premium Member
Joined
·
10,793 Posts
Hmm its my understanding you can only spend the $amount in the account. Another words if there is $500 in there you can't spend $600.<br><br>
Also, if you don't spend all the money in the calendar tax year, you do not get it back. Same if you leave the job and there is money still in there. You do not get it back.
 

·
Registered
Joined
·
3,171 Posts
Gosh, I would just ask his HR dept. DH could ask like "just so I'm clear . . ." so it doesn't look funny. I would imagine they would want the $$ back ASAP!
 

·
Registered
Joined
·
505 Posts
Got the baby down before I forgot.<br><br>
Per IRS regulations (Section 125 IRC), your DH is entitled to his full elected amount on day one of the plan year, regardless of contributions. So, plan year begins 1/1/08, you spend your whole $3k, you get it.<br><br>
Dates of service have to be within the plan year, or prior to termination of employment. So, let's say you elect $1200, by the end of January you have $100 in there. Date of service is 1/31 for $1200. The claim is paid.<br><br>
If he terminates employment prior to the end of the plan year, his employer CAN NOT ask him to repay any amounts received but not deducted from his pay.<br><br>
Now, if he leaves 1/31, put in $100 and there have been no medical expenses, you lose the $100. His employer can not return it. You can elect COBRA to continue post-tax, but it's usually not worth it.<br><br>
Ortho gets more complicated b/c the service often isn't over in one shot. So, if you're making monthly payments that correspond to monthly visits, then services/payments after termination would not be eligible for reimbursement.<br><br>
If the FSA is administered by a reputable organization, this should be no problem. If it's done by the company itself, they could try to do something not in your best interest (either maliciously or out of ignorance).<br><br>
HTH. In case you're wondering about this, I'm a member of ECFC and I'm certified in flexible compensation with over 12 years experience.<br><br>
If you need more info, feel free to PM me.
 

·
Registered
Joined
·
3,171 Posts
Oh, and with our old company you could take the money out before you put it in, but with our new one you can't. Each one is different, IME.
 

·
Registered
Joined
·
505 Posts
<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>mamamilkers</strong> <a href="/community/forum/post/9893535"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">Oh, and with our old company you could take the money out before you put it in, but with our new one you can't. Each one is different, IME.</div>
</td>
</tr></table></div>
Shouldn't be different unless it's funded by your employer. It's called the universal coverage rule.<br><br>
Except the day care account, that one you can only get out what you put in.
 

·
Registered
Joined
·
9,290 Posts
Discussion Starter · #10 ·
Thanks!! The ortho offers monthly payments, but gives a discount if it's all paid upfront, so we're paying $950 for phase 1 of her braces. So, she'll have them on for about 10 mos, then a retainer for a year or so, then braces back on for another year- she's only 7.<br><br>
I know the full amount is available day 1. I did find what Michelle said on wikipedia, but couldn't find anything on the irs website, so thanks for that! I know it's use it or lose it if he doesn't spend it, but wasn't sure about leaving the company.<br><br>
Our FSA provider is IGOE company- which seems pretty good so far. So, from what you've said Michelle, I can feel good about using the debit card linked to our FSA account, b/c if he DOES leave, I'd rather have the company be out the money than us, that's for sure!
 

·
Premium Member
Joined
·
1,550 Posts
This is interesting. My husband's FSA paperwork from a large hospital indicates that unpaid FSA deductions will be taken from last pay check. When I left a job with 3 months to go in my plan year, I paid the $300 remaining and had access to the funds on my debit card until the end of the plan year (3 months after I left the job).
 

·
Registered
Joined
·
505 Posts
<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>kijip</strong> <a href="/community/forum/post/9893925"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">This is interesting. My husband's FSA paperwork from a large hospital indicates that unpaid FSA deductions will be taken from last pay check. When I left a job with 3 months to go in my plan year, I paid the $300 remaining and had access to the funds on my debit card until the end of the plan year (3 months after I left the job).</div>
</td>
</tr></table></div>
From my experience, this shouldn't be. With your company, it's like they did a modified COBRA, where normally you'd make the contributions post-tax in order to continue. With you husband's, I honestly do not believe that to be in compliance with the regs. Do they administer their own or does a third party handle the claims?
 

·
Premium Member
Joined
·
1,550 Posts
Why the heck would an employer offer a benefit that could leave them holding the bag for unpaid FSA money? That seems odd. Why are the regulations set up like that? I don't know if my husband's work does their own or via a third party---they are a major hospital with an amazing HR department and incredible benefits (we get full medical even though he works 1/2 time, he gets paid for bike commuting, gets a free bus pass, just recieved a nice holiday gift card, reduced cost tickets, free car sharing membership, adoption expense assistance, the list pretty much never ends) so it is hard to think that they are breaking the law. Maybe they have something different than the standard FSA and I am just confused. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol">
 

·
Registered
Joined
·
505 Posts
<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>kijip</strong> <a href="/community/forum/post/9896721"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">Why the heck would an employer offer a benefit that could leave them holding the bag for unpaid FSA money? That seems odd. Why are the regulations set up like that? I don't know if my husband's work does their own or via a third party---they are a major hospital with an amazing HR department and incredible benefits (we get full medical even though he works 1/2 time, he gets paid for bike commuting, gets a free bus pass, just recieved a nice holiday gift card, reduced cost tickets, free car sharing membership, adoption expense assistance, the list pretty much never ends) so it is hard to think that they are breaking the law. Maybe they have something different than the standard FSA and I am just confused. <img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/lol.gif" style="border:0px solid;" title="lol"></div>
</td>
</tr></table></div>
Employers do it for two reasons. First, if an employee doesn't submit claims or doesn't have claims, the employer keeps the money. You'd think that wouldn't happen anymore but I see it happen all the time. People say they just "forget" about it. Must be nice to be able to forget about your money!<br><br>
Also, employers have to match what employees pay in state and federal taxes. So if you're not paying on your contributions to the FSA, neither are they (except in NJ where state taxes still apply - note which state I'm from!).<br><br>
That's it, in a nutshell.
 

·
Registered
Joined
·
1,285 Posts
my dh asked the same question at work, and HR said it all evens out pretty much- the money that's not spent and the money that is spent and then people leave and they don't pay for it.
 
1 - 15 of 15 Posts
Top