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Adm issues in disaster area


Guest kimb

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I’m hoping someone here is familiar with administrative obstacles after your area has been declared a disaster area by the President. We are in an area that was declared a disaster area due to Hurricane Katrina and are dealing with a lot of odd situations because of it. One question I have is:

Would it be allowed to permit a participant that had to terminate their employment or go on leave due to the hurricane (main reason is because of relocation of either the individual or the company), to submit expenses incurred after the hurricane for reimbursement under their health FSA plan? The participant either had not incurred medical expenses before the hurricane or has lost all documentation in the flood.

Please let me know if you need more information to help with this.

Thanks in advance.

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Kimb: The info you've given seems to be a little contradictory. At one point "......to submit expenses incurred after the hurricane....." and then you state ".....the participant either had not incurred medical expenses before the hurricane or has lost all documentation in the flood....". Here are some pieces that might help: 1) It doesn't matter if and when a hurricane occurred, what matters is did he have expenses, if so then he will need to go back to providers for copies of receipts, etc. He has (usually) up until 90 days after the plan year ends to file claims for expenses incurred in the previous year. (see the plan document or SPD to be sure) 2) In some disaster areas, the president has declared tax relief; i.e., delayed filing of tax returns, extra tax credits, for victims. I doubt that 125 FSA participants will be given special help just because they were FSA participants.

3) Leave of absence is probably addressed in your plan document/spd. If the company has considered the employee to be on leave of absence due to the hurricane, then he never terminated and thus is still a participant in the plan until the end of the plan year. Did the company pay him while on leave? Then there will be a question of stopping elections (change of status) etc.

Maybe this will get you started, and perhaps with more info from others,(and you) we can help you further down the path.

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E as in ERISA, thanks for the link, but I already had that info printed and don't see where it addresses my problem.

jmor99, the problem many of our clients are having is the participant went to a doctor or a dentist in an area where every building is wiped out along with all the records. The doctors and dentists are spread out all over the place and most are not reachable. The participants have no way of optaining documentation from these providers showing they incurred the expense. Other participants were waiting till the end of the year to have a procedure done and either the doctor is no longer there or the participant had to relocate and can not have the procedure done before the end of the plan year.

In one situation I'm facing the participant was terminated because she didn't want to relocate to Houston when the company did and now she's submitting medical expenses she incurred after her term date. The other situation the participant is on unpaid administrative leave because she can't come home till she finds housing. She too is submitting medical expenses incurred after her leave started.

I just found something in the ECFC Flex Reporter dated September 2005. -- In Notice 2005-73 it says in a disaster area, certain acts are postponed if the last day to perform the act would otherwise fall within the period beginning on August 29, 2005, and ending on January3, 2006. Congress extended this period to February 28, 2006. -- It also says, -- that an employer may operate a 125 plan on a July 1 calendar year, and may have adopted a grace period extension for 2 1/2 months, or through September 15. For that employer, the February 28, 2006 extension gives individuals an extra 5 months to use their benefits. --

My interpetation of this is if the last day to perform the act fell between August 29, 2005 and February 28, 2006, the Notice 2005-73 states the participant has till February 28, 2006 to incur the medical expenses for reimbursement under their Health FSA. Am I reading this correctly?

Any help is appreciated on this. It appears I'm the only one dealing with situations like this and it helps to have someone to bounce things off of sometimes. :huh:

Thanks.

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