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Note that under ERISA (at least my understanding of ERISA), work a year and then have a 1-year break does NOT result in losing the first year. Service is not lost unless the break consists of 5 consecutive years.

With the caveat that I haven't seen the document: I agree with your Boss as to the 8/15 entry date. I'm assuming there has been no 1 year break in service (i.e. employee worked 500 hours in 2015 prior to termination). For solid backup, I'd look at the terms of your document. This is typically very clear. P.S. FWIW, here's the applicable provision from a normal Relius (now FIS) document: If any Eligible Employee had satisfied the Plan's eligibility requirements but, due to a severance of employment, did not become a Participant, then such Eligible Employee shall become a Participant as of the later of (1) the entry date on which he or she would have entered the Plan had there been no severance of employment, or (2) the date of his or her re-employment. Notwithstanding the preceding, if the rehired Eligible Employee's prior service is disregarded pursuant to Section 3.5(d) below, then the rehired Eligible Employee shall be treated as a new hire.

I am not an expert on this matter, but something did jump out at me. I thought all FSA's could only be funded with employee monies? If that is the case, how can the HRA monies be used? My vote would be a 1/2 of no.