Let go from job—flexible spending account deactivated, $1,800 lost.
May 22, 2016 2:30 PM Subscribe
I was recently let go from a job that wasn't working out after a few months. I had signed up for the employer's Flexible Spending Account to apply pre-tax dollars from my paycheck towards healthcare and transportation costs. They turned off my card the day I was let go and I cannot access the ~$1,800 (of my own money) on the card. Both they and AmeriFlex (FSA provider) claim their hands are tied and they cannot disburse any of the money.
In the three months I was employed, I never used the FSA card. I tried using it about a month in and it was declined, so I assumed there had been a problem setting it up, so I paid for a couple of prescriptions and doctor office co-pays out of pocket until I could find time to sort out whatever was wrong with the FSA account.
After I was unexpectedly let go, I tried using the card (confirming it had been activated online) at a couple of pharmacies and doctor's offices, and it was declined. After speaking with an HR coordinator at my former employer, apparently the policy is to immediately deactivate the FSA account/card upon employee termination, regardless of whether funds are in the account. This, of course, was not communicated to me at all while I was being let go.
Surely you can see the catch-22 here: FSA accounts are generally considered "use it or lose it" resources, but if I am let go unexpectedly and the card is immediately deactivated, I literally have no chance to "use it", and so seemingly automatically "lose it". If I had just had $100-$200 in the account I might just forget about it, but with $800 on the healthcare side and $1,000 on the transportation side, I can't just easily let that go—doubly so now that I'm unemployed and every dollar matters.
I can barely fathom that this is even legal, especially since this is my own money withheld from paychecks. The suggestions from the AmeriFlex rep was to submit any receipts I did have during the time of employment for partial reimbursement. I could maybe scrounge up $150 in receipts for healthcare, but nowhere near the $800 on the card. And I never used the transportation side since I had a healthy balance already on my Clipper transportation pass. According to them, "a new law passed in 2016" prevents them from doing any kind of manual disbursement for transportation funds.
Former employer suggested that I sign up for COBRA to reactivate the account, but I use my wife's health insurance and see no sense in signing up to pay more money for unneeded health insurance when I'm trying to reclaim money, not spend more.
Both an AmeriFlex supervisor and former employer are unwilling to help further.
Do I have any recourse?
In the three months I was employed, I never used the FSA card. I tried using it about a month in and it was declined, so I assumed there had been a problem setting it up, so I paid for a couple of prescriptions and doctor office co-pays out of pocket until I could find time to sort out whatever was wrong with the FSA account.
After I was unexpectedly let go, I tried using the card (confirming it had been activated online) at a couple of pharmacies and doctor's offices, and it was declined. After speaking with an HR coordinator at my former employer, apparently the policy is to immediately deactivate the FSA account/card upon employee termination, regardless of whether funds are in the account. This, of course, was not communicated to me at all while I was being let go.
Surely you can see the catch-22 here: FSA accounts are generally considered "use it or lose it" resources, but if I am let go unexpectedly and the card is immediately deactivated, I literally have no chance to "use it", and so seemingly automatically "lose it". If I had just had $100-$200 in the account I might just forget about it, but with $800 on the healthcare side and $1,000 on the transportation side, I can't just easily let that go—doubly so now that I'm unemployed and every dollar matters.
I can barely fathom that this is even legal, especially since this is my own money withheld from paychecks. The suggestions from the AmeriFlex rep was to submit any receipts I did have during the time of employment for partial reimbursement. I could maybe scrounge up $150 in receipts for healthcare, but nowhere near the $800 on the card. And I never used the transportation side since I had a healthy balance already on my Clipper transportation pass. According to them, "a new law passed in 2016" prevents them from doing any kind of manual disbursement for transportation funds.
Former employer suggested that I sign up for COBRA to reactivate the account, but I use my wife's health insurance and see no sense in signing up to pay more money for unneeded health insurance when I'm trying to reclaim money, not spend more.
Both an AmeriFlex supervisor and former employer are unwilling to help further.
Do I have any recourse?
Typically you fund the account over 12 months, even though they make all the money available on Jan 1. So if you leave during the year your employer is going to even themselves up from your last paycheck. All you are entitled to is what you contributed in your few months. You should be able to use that, although freezing it until they work out how much you actually put in and how much you used doesn't seem unreasonable.
posted by COD at 3:04 PM on May 22, 2016
posted by COD at 3:04 PM on May 22, 2016
If my employment were to end at a time in the year when I have collected more from my FSA than I have contributed, I would be on the hook for the difference.
No, you wouldn't. It's odd, but set up as a tradeoff: if you leave before you've spent your total projected annual contributions, you leave the money behind, but if you leave after spending those contributions but before paying them all, you don't get charged.
Some of the things I have read suggest that you can elect COBRA for just the FSA . That means you will have to pay the monthly payments and the cost of the plan, but not the health insurance premiums. It would at least be worth asking your plan specifically about this.
But I'm with the person above: are you sure you put all that money in in a few months? The maximum contribution to a health FSA is $2550, basically $212.5/mo. How did you make $800 of contributions on the FSA side in three months? Similarly, the max contribution to transit is $130/mo. (you don't mention parking). How do you get to $1000 in three months?
posted by praemunire at 3:06 PM on May 22, 2016 [5 favorites]
No, you wouldn't. It's odd, but set up as a tradeoff: if you leave before you've spent your total projected annual contributions, you leave the money behind, but if you leave after spending those contributions but before paying them all, you don't get charged.
Some of the things I have read suggest that you can elect COBRA for just the FSA . That means you will have to pay the monthly payments and the cost of the plan, but not the health insurance premiums. It would at least be worth asking your plan specifically about this.
But I'm with the person above: are you sure you put all that money in in a few months? The maximum contribution to a health FSA is $2550, basically $212.5/mo. How did you make $800 of contributions on the FSA side in three months? Similarly, the max contribution to transit is $130/mo. (you don't mention parking). How do you get to $1000 in three months?
posted by praemunire at 3:06 PM on May 22, 2016 [5 favorites]
You should be able to receive reimbursement for expenses incurred while you were employed by submitting claims with receipts manually. There is probably a deadline for this. I believe it doesn't matter how much was actually funded by you. I think if you spent $800 prior to being let go, you should be able to be reimbursed for that $800, but that's based on knowledge from 6 years ago. Things may have changed. There may be different rules regarding the transportation amount, but I think the same would hold true. Good luck!
posted by katemcd at 3:21 PM on May 22, 2016
posted by katemcd at 3:21 PM on May 22, 2016
Additionally, there's usually an employer contribution of $500 added in as well.
posted by Ruthless Bunny at 3:38 PM on May 22, 2016
posted by Ruthless Bunny at 3:38 PM on May 22, 2016
Benefits Manager Here:
1. Any claims incurred prior to the account term date (your employment term date) can be reimbursed up to the claim by deadline laid out in your FSA plan documents. It could be 90 days, it could be 60 days, it could be the same deadline as active accounts, it all depends on your former employer's plan set-up. Keep in mind that a claim's "incurred date" and its "paid date" are not the same. If you had a medical procedure done prior to terming and paid for it after you could still reimburse it as the expense was incurred while the account was active.
2. Once the account is terminated you can no longer incur claims.
3. Once the account is terminated your card will no longer work as the account is terminated. You will need to reach out to your FSA administrator in order to submit claims online, by mail, or by fax.
4. You can actually claim against your entire election amount (even if you did not contribute the full amount). This is the employer's risk of having the plan, opposite of your risk that is if you don't use all the funds you forfeit them.
5. You can keep your Health Care FSA going through COBRA (not a Dependent Care FSA). The upside is that it keep your FSA active so you can continue to incur claims, the downside is that your contributions are no longer pre-tax. You can just choose to sign up for the FSA COBRA, you do not need to have the medical, dental, or vision insurance COBRA for that, each one is separate.
Additionally, there's usually an employer contribution of $500 added in as well.
- You may be thinking of an HSA which is different from an FSA. While employers CAN contribute to an FSA it is very uncommon (as in I can't think of any that do) and the amount would 100% up to the employer so I wouldn't ever assume that your employer contributed any amount to an FSA unless they specifically told you so. Employer contributions to an HSA are much more common but again, the amount is completely up to the employer so I wouldn't assume $500. HSA termination rules are also very different.
posted by magnetsphere at 3:43 PM on May 22, 2016 [16 favorites]
1. Any claims incurred prior to the account term date (your employment term date) can be reimbursed up to the claim by deadline laid out in your FSA plan documents. It could be 90 days, it could be 60 days, it could be the same deadline as active accounts, it all depends on your former employer's plan set-up. Keep in mind that a claim's "incurred date" and its "paid date" are not the same. If you had a medical procedure done prior to terming and paid for it after you could still reimburse it as the expense was incurred while the account was active.
2. Once the account is terminated you can no longer incur claims.
3. Once the account is terminated your card will no longer work as the account is terminated. You will need to reach out to your FSA administrator in order to submit claims online, by mail, or by fax.
4. You can actually claim against your entire election amount (even if you did not contribute the full amount). This is the employer's risk of having the plan, opposite of your risk that is if you don't use all the funds you forfeit them.
5. You can keep your Health Care FSA going through COBRA (not a Dependent Care FSA). The upside is that it keep your FSA active so you can continue to incur claims, the downside is that your contributions are no longer pre-tax. You can just choose to sign up for the FSA COBRA, you do not need to have the medical, dental, or vision insurance COBRA for that, each one is separate.
Additionally, there's usually an employer contribution of $500 added in as well.
- You may be thinking of an HSA which is different from an FSA. While employers CAN contribute to an FSA it is very uncommon (as in I can't think of any that do) and the amount would 100% up to the employer so I wouldn't ever assume that your employer contributed any amount to an FSA unless they specifically told you so. Employer contributions to an HSA are much more common but again, the amount is completely up to the employer so I wouldn't assume $500. HSA termination rules are also very different.
posted by magnetsphere at 3:43 PM on May 22, 2016 [16 favorites]
Missed the transportation one as well in the OP. Like above you can make claims against any expenses incurred prior to termination up to whatever the claims deadline is (don't assume it is the same as the health care FSA). You can't continue a transportation FSA through COBRA though, if you haven't spent that money already then it is likely forfeit.
Both plans may have a grace period in them as well in which you could incur claims after the account termination but you would also need to check your plan documents for that.
Calling your FSA administrator should be able to answer all of these questions in a matter of minutes.
posted by magnetsphere at 3:53 PM on May 22, 2016 [1 favorite]
Both plans may have a grace period in them as well in which you could incur claims after the account termination but you would also need to check your plan documents for that.
Calling your FSA administrator should be able to answer all of these questions in a matter of minutes.
posted by magnetsphere at 3:53 PM on May 22, 2016 [1 favorite]
I have no idea what "new law" they are talking about. FSA administrators/employers have never been allowed to reimburse you unused FSA funds unless you could show that you didn't qualify for the plan at all or there was an administrative error.
posted by magnetsphere at 3:55 PM on May 22, 2016 [2 favorites]
posted by magnetsphere at 3:55 PM on May 22, 2016 [2 favorites]
"Some of the things I have read suggest that you can elect COBRA for just the FSA . That means you will have to pay the monthly payments and the cost of the plan, but not the health insurance premiums. It would at least be worth asking your plan specifically about this."
I have done this, it was worth it in my situation (leaving a job late in the year after contributing most of the funds but without having spent hardly any.) I think I had to pay a 2% premium for adminitrative fees.
But, I'll join the chorus, I think you don't understand how much money you have actually contributed if you've only been there 3 months.
posted by no1hatchling at 10:05 AM on May 23, 2016
I have done this, it was worth it in my situation (leaving a job late in the year after contributing most of the funds but without having spent hardly any.) I think I had to pay a 2% premium for adminitrative fees.
But, I'll join the chorus, I think you don't understand how much money you have actually contributed if you've only been there 3 months.
posted by no1hatchling at 10:05 AM on May 23, 2016
This thread is closed to new comments.
Are you sure you contributed the full $1800 to your plan? In my FSA, while the entire amount is a available to me at the beginning of the year, my contributions are made incrementally with each paycheck. If my employment were to end at a time in the year when I have collected more from my FSA than I have contributed, I would be on the hook for the difference. Just a thought... Is it possible that in three months of your employment you only funded 1/4 of the account?
posted by mammoth at 2:53 PM on May 22, 2016 [12 favorites]