When I leave a company before the end of the year, is my Flexible Spending Account (FSA) fully funded even though I personally haven't contributed the full amount?

March 7, 2006 8:03 AM

HR/Benefits Filter When I leave a company before the end of the year, is my Flexible Spending Account (FSA) fully funded even though I personally haven't contributed the full amount?

For my FSA I signed up to put in $2000 for medical and $5000 for dependent day care.

I'm considering leaving my current company soon, so I'll only have put in about a quarter of the total if I leave.

When I was laid off from a company a few years ago, my entire FSA amount (only medical then) was available to me (even though I had only put in half of it myself). I was told that was because FSA accounts are fully funded at the begining of the year by companies.

Is this true? Or just wishful thinking?

If I go to my insurance company's web site that handles my FSA, it does list the full $2000 for medical as the money available. For dependent day care, it only lists the money I've put in. Is the dependent day care money handled differently from the medical (that is, is it not fully funded)?

And if dependent daycare is fully funded when I leave a company, can I put aside another $5000 at a new company for year total of $10,000? I'm guessing that's likely not allowed in the tax code.

posted by ShooBoo to work & money (7 comments total)

Mine is. It's a risk that FSA's allow for, which is why they cap contributions at around $2,000.
posted by sdrawkcab at 8:26 AM on March 7, 2006

My company's FSA is "use it or lose it" meaning if all my funds aren't spent when I quit my job, I don't get the money back in cash.

You should ask HR.
posted by elisabeth r at 8:37 AM on March 7, 2006

I was told that if I use up my entire amount (or more than I have contributed at the time) and I leave before my contribution time is complete, that I owe the company the amount over what I have paid in.
posted by MeetMegan at 8:38 AM on March 7, 2006

When I was laid off from a company a few years ago, my entire FSA amount (only medical then) was available to me (even though I had only put in half of it myself). I was told that was because FSA accounts are fully funded at the begining of the year by companies.

Is the dependent day care money handled differently from the medical (that is, is it not fully funded)?

Yes on both. The full amount of your Health Care FSA and the pro-rated amount of your Dependent Care FSA are available to you. You can be reimbursed for services that you received prior to the date you quit or were fired. Claims must be submitted within 90 days of your termination date. The company's potential losses on your Health Care expenses will be offset by funds other employees forfeited under the "use it or lose it" rule.

And if dependent daycare is fully funded when I leave a company, can I put aside another $5000 at a new company for year total of $10,000? I'm guessing that's likely not allowed in the tax code.

Since the Dependent Care Account gets pro-rated, you can elect to set aside $5,000 annually at your new employer, and you will not exceed $5,000. So you are safe.
posted by deadfather at 10:03 AM on March 7, 2006

sdrawkcab is correct re:Medical. If you elect to put in $500 on Jan 1 and leave on Jan 15 (having contributed only one paycheck toward the $500) -- you still get to spend the whole $500. That's the way it works -- I speak from personal experience. Not sure about the dependent day care, tho.
posted by lot49 at 10:05 AM on March 7, 2006

Here's a good FAQ.
posted by deadfather at 10:06 AM on March 7, 2006

I'm in that situation...I elected to put about $2100 in medical FSA this year, but I'm leaving the firm at the end of March. Though I haven't put the whole amount in, I can use as much of it as I want as long as I claim expenses incurred before I leave. The company bears the risk of my leaving before I put in my whole contribution. I could keep paying into the FSA under COBRA, and therefore use it the rest of the year, but I don't have the money for that.

We don't have vision insurance at work. Both my wife and I went out and got new glasses...
posted by lhauser at 11:05 PM on March 7, 2006